THE government has never borrowed to fund its operating expenditure, but only to finance development projects that strengthen the nation’s future, said Second Finance Minister Datuk Seri Amir Hamzah Azizan.
He stressed that all borrowings are directed towards long-term national development, including building infrastructure, enhancing competitiveness, and creating equitable opportunities for the people.
“Malaysia has been recording fiscal deficits continuously since 1998, and every year the government finances the deficit through borrowings to support national development expenditure,” he said when winding up the debate on the Supply Bill 2026 (Budget 2026) at the policy stage in the Dewan Rakyat on Tuesday.
“We must acknowledge that the sharp rise in national debt began in 2020, when the previous government had to undertake additional borrowings to finance economic stimulus and recovery packages to protect the people and support businesses affected by Covid-19.
“As a result, federal government debt increased from RM793 billion or 52.4 per cent of GDP in 2019 to RM1.079 trillion or 60.2 per cent of GDP at the end of 2022 – a rise of RM286.6 billion over three years,” he said.
Amir Hamzah noted that Malaysia’s fiscal deficit has been consistently declining, from 6.4 per cent in 2021 to 4.1 per cent in 2024, and is projected to narrow further to 3.5 per cent by 2026.
“In line with this, new government borrowings have also decreased to around RM77 billion in 2025 compared to RM100 billion in 2021 and 2022, while debt growth is projected to moderate to around six per cent in 2025,” he said.
He added that the government continues to ensure debt levels remain below the statutory ceiling of 65 per cent of GDP, as stipulated under the Loan (Local) Act 1959 and the Government Funding Act 1983. Offshore borrowings of RM22.8 billion also remain well below the permitted limit of RM35 billion.
“The weighted average cost of government borrowing was lower at 3.79 per cent between January and August 2025, while the average maturity period for total issuances this year is projected at around 12.6 years,” Amir Hamzah said. - November 5, 2025
