MALAYSIA’S federal debt has reached RM1.304 trillion as of June 2025, accounting for 63.9 per cent of the nation’s GDP, Minister of Finance II Datuk Seri Amir Hamzah Azizan told the Dewan Negara today.
This marks a rise from RM1.248 trillion, or 64.6 per cent of GDP, recorded at the end of 2024.
In a written reply to Senator Datuk Setia Salehuddin Saidin in the Dewan Negara, the ministry explained that the increase was primarily due to continued deficit financing to support national development expenditure.
As of March 2025, the government’s total liabilities stood at RM384.6 billion, comprising RM238.8 billion in guaranteed commitments and RM145.8 billion in other obligations.
Amir said despite these figures, the ministry emphasised that fiscal consolidation efforts under the MADANI government were beginning to show results.
Annual borrowings have declined from RM99.4 billion in 2022 to RM76.8 billion in 2024, while the fiscal deficit has been reduced from 5.5 per cent of GDP in 2022 to 4.1 per cent in 2024. The government has set a target to bring this figure down to 3.8 per cent by the end of 2025.
"In line with the MADANI Economic Framework, the government continues to alleviate cost-of-living pressures and reduce poverty through comprehensive support packages," he said.
These include an expanded allocation of RM15 billion for Sumbangan Tunai Rahmah and Sumbangan Asas Rahmah, up from RM10 billion previously, as well as a one-off RM2 billion enhancement announced by Prime Minister Datuk Seri Anwar Ibrahim in July.
“Social welfare support managed by the Department of Social Welfare has been increased to RM2.9 billion, with higher monthly payments for elderly recipients and children from low-income families.
“Additional allocations include RM791 million for school aid and RM1 billion to address broader cost-of-living concerns through initiatives such as the Payung RAHMAH programme,” Amir said.
In response to a supplementary question by Senator Salehuddin, the ministry offered assurances that allocations for anti-poverty initiatives, education, healthcare and affordable housing would not be reduced despite the country’s fiscal constraints.
"Social spending will remain protected expenditure within the national budget," Amir said, pointing to Budget 2025 allocations of RM86 billion for education (up from RM80.5 billion in 2024), RM45.7 billion for healthcare (up from RM40 billion), and RM3.8 billion for housing (up from RM2.8 billion).
The government also highlighted increased infrastructure development in 2025, including the construction of 44 new schools, the rebuilding of 543 dilapidated ones, and upgrades to 486 rural health clinics.
In a related inquiry, Senator Datuk Wu Him Ven asked about measures to expand Malaysia’s fiscal space given persistent global volatility, the burden of targeted subsidies and commitments under the 12th Malaysia Plan.
Amir replied that the government would continue to pursue fiscal reform, including the implementation of the Medium-Term Revenue Strategy (MTRS), broader tax collection via the extended Sales and Services Tax (SST), and the rollout of electronic invoicing systems.
Leakages are being tackled through enhanced enforcement, including the use of artificial intelligence at customs and compliance audits. Subsidy rationalisation — particularly for diesel and RON95 petrol — is under way, alongside structural reviews of statutory bodies.
To address income inequality, the Minster said measures include raising the minimum wage to RM1,700 and promoting the adoption of a more equitable ‘living wage’ policy. It added that some government-linked institutions, such as Khazanah, have already implemented such measures for their Malaysian staff. - August 27, 2025
