KUALA LUMPUR (Oct 14): The federal government's financial performance in 2023 improved over 2022, with excess revenue increasing by RM2.028 billion, according to the Auditor General's Report released on Monday.

The report noted that the federal government's deficit decreased by RM8.595 billion, reducing the deficit-to-gross domestic product (GDP) ratio to 5.0% from 5.5% in 2022. 

"However, the federal government needs to pay attention to the increasing trend of federal liabilities consisting of federal debt and financial liabilities, which increased RM92.038 billion (6.6%) to RM1.492 trillion, compared with RM1.400 trillion in 2022," it added.

The federal government's guarantee commitment saw increases for six companies, which raised the total value of commitments by RM3.29 billion in 2023 to RM227.4 billion from RM224.116 bil in 2022. The six companies are: DanaInfra Nasional Bhd (up RM80 million), Prasarana Malaysia Bhd (up RM200 million), Malaysia Rail Link Sdn Bhd (up RM10.5 billion), Urusharta Jamaah Sdn Bhd (up RM704.6 million), Lembaga Kemajuan Tanah Persekutuan (up RM6.93 billion) and MKD Signature Sdn Bhd (up RM1.56 billion).

Meanwhile, dividends received by the federal government significantly decreased by RM9.756 billion (17.5%), down from RM55.815 billion in 2022.

Overall, the financial statements showed a true and fair view of the position of the federal government's finances for the year ended Dec 31, 2023, according to the AG's Report.

"The federal government should reduce the fiscal deficit and dependence on new loans by increasing revenue collection efficiency, implementing targeted spending, and have value for money and solidify financial management of government companies," it added.

The federal liabilities-to-GDP ratio rose to 81.8% in 2023, up from 78.0% in 2022, with the federal debt-to-GDP ratio increasing to 64.3% from 60.2%. 

The statutory debt ratio also climbed to 62.1% from 57.5% in 2022. 

Despite these increases, the AG Report acknowledged the government's fiscal reforms, including the Public Finance and Fiscal Responsibility Act 2023, to manage federal debt prudently. 

The Act outlines medium-term commitments to achieving fiscal objectives by 2030, targeting a fiscal balance of 3% of GDP, debt levels of 60% of GDP, and financial guarantee of 25% of GDP.

The government also plans to rationalise and consolidate the deficit, projecting a fiscal deficit of 4.3% of GDP in 2024.

In 2023, total accounts receivable amounted to RM98.367 billion, down from RM105.824 billion the previous year. 

The Inland Revenue Board (IRB) accounted for 35.2% of the receivables, totalling RM34.591 billion. 

Other receivables, including loans and advances from companies, government states, statutory bodies, cooperatives, and various agencies, amounted to RM52.530 billion (53.4%). 

Of the total receivables in 2023, RM28.412 billion (28.9%) had remained uncollected for over six years. 

A total of RM1.635 billion was written off, with receivable tenures over six years making up RM1.355 billion of this amount. IRB's receivables decreased by RM5.794 billion, or 14.3%, to RM34.591 billion, primarily due to a deficit assessment of RM6.976 billion and a write-off of RM726.70 million. 

To enhance revenue collection, it is essential for relevant parties to take decisive, proactive measures, and enforce effective legal actions, according to the AG's Report.

Additionally, improving receivables management requires setting annual collection targets for outstanding debts, said the report.

To enhance the federal government's financial performance, the AG recommended several measures. 

Firstly, the government should increase revenue through diverse sources, and improve governance over public expenditure to strengthen its financial position.

Secondly, it is crucial to manage public debt prudently to reduce reliance on new loans, and government companies should improve financial management to provide dividends without needing federal financial aid. 

Lastly, control officers should closely monitor development projects under the 12th Malaysia Plan, and implement timely interventions to ensure their completion by the end of 2025.

For more AG's Report 2024 stories, click here.