KUALA LUMPUR (Oct 10): The government’s debt service charges (DSC), which are the second-largest part of its spending, are expected to grow more slowly next year due to reduced borrowing, according to the Ministry of Finance (MOF).
DSC is projected to reach RM58.3 billion in 2026, a 7.4% rise from the revised RM54.3 billion estimated in 2025, according to the Fiscal Outlook and Federal Government Revenue Estimates report.
“Of this amount, RM57.6 billion, or 98.8%, is meant for domestic loans, while the balance is for offshore loans,” MOF said.
At RM58.3 billion, DSC is equivalent to 17.2% of the government’s total operating expenditure (opex) in 2026 — behind emoluments at RM109.37 billion, or 32.3% of opex.
Borrowing cost has been on an upward trend in line with national debt.
However, the government’s more prudent stance on taking new debt following the economy’s recovery phase post the Covid-19 pandemic has seen DSC’s growth rate taper.
Annual growth in DSC slowed from 7.6% in 2025, 9% in 2024 and 12.3% in 2023.
“An effective and prudent debt management strategy, coupled with active investor engagements, has contributed to optimisation of the government borrowing cost,” MOF said.