KUALA LUMPUR (Feb 29): The federal government's debt grew 8.6% year-on-year to RM1.17 trillion as of the end of December 2023, constituting 64.3% of gross domestic product (GDP), according to the Finance Ministry.

In a written parliamentary response to Datuk Seri Ronald Kiandee (Parikatan Nasional-Beluran), the ministry said the federal government's debt consists of domestic debt amounting to RM1.14 trillion or 97.5%, and offshore loans totalling RM29.8 billion or 2.5%.

"In terms of the federal government's debt and liability exposure position, as of the end of December 2023, it is as much as RM1.53 trillion or 84% of GDP, covering federal government debt of RM1.17 trillion, guarantee commitments of RM226.1 billion, and other liabilities of RM133.7 billion," the ministry said.

Meanwhile, the statutory debt, including Malaysian Government Securities (MGS), Malaysian Government Investment Issues (MGII), and Malaysian Islamic Treasury Bills (MITB), stood at 62.1% of GDP, just below the statutory limit set at 65% of GDP.

Offshore loans amounted to RM29.9 billion, and Malaysian Treasury Bills (MTB) amounted to RM5.5 billion, both below their statutory limits of RM35 billion and RM10 billion, respectively.

Regarding the fiscal deficit, the ministry said it achieved a fiscal deficit target of 5% of GDP or RM91.4 billion by end-2024, lower than the 5.6% or RM99.5 billion recorded in 2022.

The deficit is projected to further decrease to 4.3% in 2024.

The ministry stressed that the federal government is committed to reducing its debt, with the aim of keeping it below 60% of GDP, following the Public Finance and Fiscal Responsibility Act 2023, and is committed to its gradual fiscal consolidation plans for medium- and long-term financial sustainability.

The Act provides for the responsibilities, accountability, governance and transparency of the government in managing public finances and fiscal risks, which its proponents have said would act as a check and balance on the government when setting fiscal targets.