KUALA LUMPUR (July 29): Malaysia’s federal debt reached RM1.3 trillion at the end of June, though the pace of accumulation has slowed, said Deputy Finance Minister Lim Hui Ying.

The increase from RM1.25 trillion at the end of 2024 was primarily driven by financing needs for development spending, including public infrastructure, education, healthcare, and social protection programmes, she told the Dewan Rakyat during an oral question-and-answer session on Tuesday.

The annual debt growth rate moderated from 10.2% in 2022 to 6.4% in 2024, with a further decline to around 6% projected for 2025, according to Lim.

To support long-term fiscal sustainability, she said the government is broadening its revenue base, optimising public expenditure, particularly through subsidy rationalisation and a comprehensive spending review, while ensuring borrowings are directed towards high-impact development projects.

The government has also capped its financial guarantee exposure at 25% of gross domestic product under the Public Finance and Fiscal Responsibility Act, and is promoting more “user-pay” models through the Public-Private Partnership Master Plan 2030 (PIKAS 2030) to ease fiscal pressure.

Total liabilities, including committed guarantees and public-private partnership obligations, stood at RM384.6 billion as of end-March 2025, marginally lower than RM384.8 billion at the end of 2024, Lim noted on Tuesday. She did not provide June figures.

To strengthen governance, enhance accountability, and improve institutional efficiency, the government is in the process of drafting the Government Procurement Bill and another bill to regulate state-owned enterprises, she added.

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