MoF: Federal Govt Approves RM24.15 Bln In Loans To State Govts As Of Aug 31

KUALA LUMPUR, Oct 8 (Bernama) -- The federal government has approved loans totalling RM24.15 billion to state governments as of Aug 31, 2025, according to the Ministry of Finance (MOF).

In a written reply uploaded to the Parliament website, the ministry stated that the loans are divided into four categories, namely Low-Cost Public Housing (PAKR), water supply, State Economic Development Corporations (PKEN), and miscellaneous.

Based on the trend and breakdown of the loans, the water supply category represents the largest portion, accounting for 58.12 per cent, followed by miscellaneous (27.61 per cent), PAKR (7.84 per cent) and PKEN (6.43 per cent).

“To ensure that state government debt does not place a burden on the national fiscal position, the disbursement of these loans must go through an orderly and thorough process, including reasonable loan terms and interest rates imposed on the borrowers, taking into account the federal government’s cost of funds.

“In addition, the loans must undergo a due diligence process from the aspects of financial and non-financial covenants, with consideration given to the borrowers’ capacity to repay the loans,” the ministry said in response to Azli Yusof (PH–Shah Alam) regarding the current trends in state government borrowings.

Meanwhile, in response to a separate question from Chong Chieng Jen (PN–Stampin) regarding the approved RM335 billion in operating expenditure and RM88 billion in development expenditure under Budget 2025, the ministry stated that the allocation for 2025 by state has been summarised according to regional clusters.

The Southern Region received RM4.8 billion for development and RM9.6 billion for operating expenditure; the Northern Region received RM7.2 billion for development and RM22.6 billion for operating expenditure; the Eastern Region received RM8.4 billion for development and RM19.7 billion for operating expenditure.

In addition, the Central Region received RM24.1 billion for development and RM17.1 billion for operating expenditure; Sabah was allocated RM6.7 billion for development and RM10.6 billion for operating expenditure; and Sarawak received RM5.9 billion for development and RM8.9 billion for operating expenditure.

Separately, in response to a question from Datuk Seri Bung Mokhtar Radin (BN–Kinabatangan), the ministry stated that the government is currently reviewing the direction and implementation of the Trans-Sabah Gas Pipeline (TSGP) project.

It added that the government is also exploring, reviewing and implementing appropriate medium- and long-term initiatives to ensure electricity supply security in Sabah, particularly in the East Coast region.

“This includes the development of a Battery Energy Storage System (BESS) in Lahad Datu, Sabah, with a capacity of 100 megawatts (MW)/400 MWh, aimed at stabilising electricity supply to the East Coast grid covering the Sandakan–Lahad Datu–Tawau corridor,” the ministry said.

-- BERNAMA