KUALA LUMPUR (July 15): The federal government's debt increased by RM50 billion to RM1.22 trillion by the end of April 2024, against RM1.17 trillion at the end of 2023, according to the Ministry of Finance (MOF).

In a written parliamentary response to Datuk Ahmad Amzad Mohamed (Perikatan Nasional-Kuala Terengganu), the ministry said that it had incurred gross loans amounting to RM70.5 billion in the first four months of 2024.

This included the issuance of Malaysian Government Securities (MGS) totalling RM30 billion, Malaysian Government Investment Issues (MGII) amounting to RM34.5 billion, and Malaysian Treasury bills totalling RM6 billion.

"These loans were utilised to settle matured debts amounting to RM20.6 billion, with the remaining RM49.9 billion covering the deficit and future debt maturities," the MOF said.

The MOF said that the annual increase in the federal government's debt primarily stems from borrowing to finance the fiscal deficit, which includes development expenditures (DE).

It emphasised that DE are crucial as they serve as public investments with a significant multiplier effect, driving economic growth.

Nevertheless, the ministry reiterated the federal government's commitment to fiscal consolidation, aiming to enhance the public financial position and reduce the debt burden in the medium and long term.

The MOF noted that the government successfully achieved a fiscal deficit target of 5% of gross domestic product (GDP), amounting to RM91.4 billion in 2023, lower than the 5.6% recorded in 2022, equivalent to RM99.5 billion.

It added that the fiscal deficit is projected to decrease further to 4.3% of GDP, or RM85.4 billion, in 2024.

In a separate response to a query from Wan Ahmad Fayhsal Wan Ahmad Kamal (Perikatan Nasional-Machang), the MOF noted that Malaysia's total debt and liability exposure stood at RM1.58 trillion as of the first quarter of 2024.

This includes RM1.21 trillion in debt, RM225.9 billion in guarantee commitments, and RM140.8 billion in other liabilities.

However, the ministry pointed out that the annual increase in debt has been declining, with the debt increase rate for 2023 decreasing to 8.6% compared to 10.2% in 2022. It anticipates this rate to further decrease to around 7% in 2024. 

https://www.theedgemarkets.com/node/719098