KUALA LUMPUR (July 18): The government constantly monitors debt service charge (DSC) expenditures and revenue collection performance to ensure the DSC-to-revenue ratio does not exceed 15%, said the Ministry of Finance (MOF).

In a written response published on the Parliament website on Thursday, the ministry stated that the government had implemented measures to increase revenue collection and rationalise expenditures.

Among the measures are raising the sales and service tax rate from 6% to 8%, and implementing targeted diesel subsidies in 2024.

“The government is implementing several strategies to ensure DSCs remain manageable and can be reduced. These include continuing gradual fiscal consolidation and prioritising local capital market sources for annual deficit financing.

“Additionally, the government is adopting strategies to broaden the revenue base, ensure sustainable revenue collection, and ensure that government borrowing is solely for financing development expenditures,” the ministry stated.

The MOF was responding to Datuk Mohd Shahar Abdullah (Barisan Nasional-Paya Besar) regarding the government’s strategy to keep DSCs below 15% of total government revenue.

The ministry added that the government is also reviewing the implementation methods and financing methods of megaprojects, as well as setting a ceiling limit on government guarantees through the Public Finance and Fiscal Responsibility Act 2023.

The implementation of the Act is expected to improve debt sustainability, supported by the implementation of the Medium-Term Revenue Strategy and a more responsible review of expenditures, said the MOF.  

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