PETALING JAYA: Federal Government debt increased by 5.9% to RM1.321 trillion last year, according to the Auditor-General’s Report Series 2/2026.
This is an increase of RM73.162bil increase from RM1.248 trillion in 2024.
In line with the increase in federal debt, debt service charges also rose by RM3.23bil, or 6.4%, last year to RM53.711bil.
Debt service charges include interest on Federal Government borrowing instruments, discounts on Treasury Bills, profit payments on government investment issues, and management fees on domestic and external loans.
They accounted for 16.2% of total operating expenditure of RM330.776bil last year.
According to the report, tabled in the Dewan Rakyat on Monday (Oct 5), the proportion of debt service charges to operating expenditure showed an increasing trend, rising from 14.1% in 2022 to 16.2% last year.
Despite this, the government narrowed its fiscal deficit to 3.7% last year from 4.1% in 2024, indicating an overall improvement in its financial performance.
"Overall, the Federal Government’s financial performance in 2025 improved, with the deficit declining by RM3.878bil, bringing the deficit-to-GDP ratio down to 3.7%, compared with 4.1% in 2024," rhe report read.
The government also recorded an RM11.451bil increase in revenue collection, with revenue rising to RM336.069bil last year from RM324.618bil in 2024.
"Operating expenditure in 2025 amounted to RM330.776bil, resulting in a revenue surplus of RM5.293bil, an increase of RM2.184bil compared with the RM3.109bil reported in 2024," the report read.
The Development Fund’s deficit balance fell by RM1.118bil, or 10.6%, to RM9.420bil last year, from RM10.538bil in 2024.
Borrowings also decreased by 8.2% during the year under review, with new borrowings amounting to RM185.577bil, a decrease of RM16.671bil from RM202.248bil in 2024.
