Federal Govt’s Financing, Debt Strategy To Continue Balancing National Development Priorities

By Zufazlin Baharuddin

KUALA LUMPUR, Oct 9 (Bernama) -- The federal government's financing and debt management strategy will continue to balance the need to finance national development priorities with the imperative of preserving fiscal resilience and maintaining debt sustainability.

The Ministry of Finance (MoF) said building on the progress achieved in fiscal consolidation, the government will remain focused on moderating the pace of borrowing, thus managing debt accumulation and rebuilding fiscal buffers, consistent with the medium-term fiscal objectives established under Act 850.

“Considering this, gross financing requirements and new borrowings will continue to be managed prudently, with domestic financing remaining the principal source of government funding,” it said in its Fiscal Outlook and Federal Government Revenue Estimates 2027 released today.

MoF said as at end-June 2026, Malaysia's public sector debt rose by 3.2 per cent to RM1,814.4 billion, equivalent to 83 per cent of gross domestic product (GDP) from RM1,758.0 billion in 2025.

The increase was primarily driven by higher federal government debt, which accounted for 76 per cent of total public sector debt.  

MoF said guaranteed debt of statutory bodies expanded to RM113.7 billion, reflecting new issuances by the Public Sector Home Financing Board (LPPSA) to support housing loan disbursements and the National Higher Education Fund Corporation (PTPTN) for educational loans.

Meanwhile, MoF said the net debt of non-financial public corporations has slightly decreased to RM321.9 billion mainly due to scheduled principal repayments undertaken by entities, including Tenaga Nasional Bhd, Pengurusan Air SPV Sdn Bhd and TRX City Sdn Bhd.

“This reduction was partially offset by financing activities from entities such as Malaysia Rail Link Sdn Bhd and Prasarana Sdn Bhd. Overall, the public sector's exposure to foreign exchange risk remains manageable, with 92.2 per cent of total debt denominated in ringgit, underscoring prudent debt composition and effective currency risk management,” it added.

-- BERNAMA