Credit : Bernama Business's X
KUALA LUMPUR, November 12: New government borrowing under the MADANI administration is meant to finance national development, including schools, hospitals, roads and water and electricity supplies, Prime Minister Datuk Seri Anwar Ibrahim said, as reported by Bernama.
Anwar, who is also Finance Minister, said the government also had to meet inherited financial obligations. “In 2023 alone, RM13 billion was needed to settle 1MDB bonds,” he said during Prime Minister’s Question Time in the Dewan Rakyat on Thursday.
He was replying to Howard Lee Chuan How (DAP-Ipoh Timor), who had asked why the government had yet to bring national debt down to a more sustainable level, and how much fiscal room remained to protect the economy and public welfare if the conflict in West Asia worsened. Anwar said that as long as the national budget remained in deficit and was financed through borrowing, the debt stock would continue to rise. “Debt is cumulative. Net borrowing in the current year adds to the unpaid debt balance from previous years,” he said, adding that the MADANI government took office with debt already exceeding RM1 trillion.
Berita Harian and Utusan Malaysia also reported the remarks. Both papers said Anwar rejected claims that the government was taking on new debt merely to cover national expenditure, and that he pointed to a sharp rise in debt between 2020 and 2022 because of the COVID-19 pandemic.
In line with the Fiscal Responsibility Act, Anwar said fiscal reforms had succeeded in controlling the accumulation of debt, which had fallen to 3.7 per cent in 2025 from 6.4 per cent in 2021, and to 5.5 per cent in 2022, 5.0 per cent in 2023 and 4.1 per cent in 2024. He said it was projected to ease further to 3.6 per cent in 2026, 3.3 per cent in 2027 and 3.0 per cent in 2028.
He said a narrower deficit meant new borrowing had fallen to RM75.6 billion in 2025 from RM76.8 billion in 2024, after RM92.6 billion in 2023 and RM100 billion in each of 2022 and 2021. “The net borrowing requirement for 2026 is expected to be around last year’s debt commitment, even though the government is shouldering higher subsidy pressure because of the conflict in West Asia,” he said. The federal debt-to-GDP ratio was also on a downward path, to 64 per cent in 2026 from 65.2 per cent in 2025, and was projected to fall to 63.7 per cent in 2027, against the FRA target of 60 per cent, he said.
Responding to claims that the debt-to-GDP ratio was lower under the previous administration, Anwar said a comparison based on that ratio alone did not capture the government’s full financial position. Before 2018, he said, some government spending was financed off the balance sheet, including through government guarantees and public-private partnership projects. Although those commitments were not recorded as direct debt, they still had implications for the government’s finances and could become national liabilities. As a result, he said, a direct debt figure of about 50 per cent of GDP at the time did not reflect the country’s overall commitments. When debt and liabilities were taken together, the true position had eased to 80.7 per cent in June 2026 from 80.9 per cent at the end of 2022, compared with 80.3 per cent in 2017, he said.
Anwar said fiscal management was not only about strengthening a more sustainable fiscal position, but also about keeping fiscal policy expansionary enough to support growth. He said targeted subsidies were also shielding the public from swings in global oil prices caused by the West Asia conflict.
Approaching four years of MADANI administration, he said, economic indicators remained encouraging. According to the Department of Statistics Malaysia’s advance estimate, third-quarter gross domestic product grew by 5.3 per cent, pointing to growth of more than 5 per cent for a third consecutive year under MADANI. Unemployment stood at 2.9 per cent as of September 2026, the lowest in more than 10 years, and inflation was expected to remain below 2 per cent this year, he said.
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