KUALA LUMPUR, Dec 20 — Malaysia will meet its fiscal deficit target of 3.4 per cent of Gross Domestic Product (GDP) this year, Finance Minister Lim Guan Eng said.

Lim said the government’s debt and liabilities have decreased from 79.3 per cent of GDP in 2017 to 77.1 per cent by the end of June 2019.

He further said that the government aimed to lower this to 65 per cent of GDP by the end of 2025.

"Recent positive reports from the World Bank and the International Monetary Fund (IMF) have confirmed Malaysia’s fiscal position as previously reported by the government.

"Malaysia is reported to be making progress on the reform agenda which has seen sustained economic growth, subdued inflation and a current account surplus,” Lim said in a statement.

The Debt Management Committee Meeting Statement dated 6 Dec 2019, showed the government’s direct debt increase from 50.1 per cent in 2017 to 52.6 per cent by June 2019.

Committed government guarantees increased from 7.4 per cent to 10.4 per cent.

The 1 Malaysia Development Berhad debts decreased from 2.8 per cent to 2.1 per cent while other liabilities for financing, purchasing power parity and infrastructure dropped from 19 per cent to 12 per cent in that same time period.

"The fiscal deficit target for 2019 of RM52 billion or 3.4 per cent of GDP will be achieved, as reported by the World Bank and the IMF. This represents a reduction from the fiscal deficit of 3.7 per cent of GDP in 2018, owing to the government’s successful implementation of open tenders and cost saving measures,” he said.

"Direct debt is expected to increase by RM52 billion in 2019 to fund the country’s development expenditure, which was approved by the Parliament in 2018.

"Aside from direct debt, the government’s liabilities also include committed government guarantees to implement public transportation and utilities projects. This includes mega infrastructure projects such as the LRT3, MRT2 and the Pan Borneo Highway with total cost exceeding RM75 billion.”

Lim also added that part of the reason government guarantees increased in 2019 was due to the government needing to bail out Tabung Haji by RM20 billion to protect the interests of depositors after international auditors discovered that the previous Barisan Nasional  administration had falsified Tabung Haji accounts to conceal huge losses and paid high dividends despite zero profits.