KUALA LUMPUR, Nov 12 — The trend of declining fiscal deficit reflects the government’s commitment to reducing the debt-to-gross domestic product (GDP) ratio, ensuring it stays below 60 per cent in the medium term, as stipulated by the Public Finance and Fiscal Responsibility Act 2023 (Act 850).

In a written response posted on the Parliament website today, the Ministry of Finance (MoF) stated that under the 2025 Budget, the government aims to reduce the fiscal deficit to 3.8 per cent of GDP.

"In line with the reduction of the deficit, the government’s new debt decreased to RM92.6 billion in 2023 from RM100 billion the previous year and further to an estimated RM84.7 billion in 2024 and targeted at RM80 billion by 2025,” MoF said.

The Ministry said this in response to a question from Tan Sri Muhyiddin Yassin (Bersatu-Pagoh) who inquired about the current financial position, including the government’s debt and liabilities.

As of the end of September 2024, the total federal government loans stood at RM166.5 billion, a decrease from RM182.5 billion at the same time in 2023.

This includes Malaysian Government Securities (MGS) worth RM71 billion (compared to RM69.5 billion in 2023), Malaysian Government Investment Issues (MGII) totalling RM73.5 billion (down from RM74.5 billion), and Treasury Bills amounting to RM22 billion (down from RM38.5 billion).

Of this total, RM96.7 billion was used for the repayment of maturing debts, including RM43.5 billion in MGS, RM24.5 billion in MGII, RM23 billion in Treasury Bills, RM5.5 billion in Government Housing Sukuk, and RM0.2 billion in offshore loans.

"The remaining RM69.8 billion was raised through new loans to finance the deficit and upcoming maturing debt,” the MoF stated.

Meanwhile, the total liabilities of the federal government amounted to RM369.3 billion at the end of June 2024, up from RM361.1 billion in 2023. This includes guarantee commitments of RM231.4 billion (up from RM227.4 billion in 2023) and other liabilities totalling RM137.9 billion (compared to RM133.7 billion in 2023).

The MoF also noted that the portion of debt in foreign currencies is minimal, around 2.5 per cent of total debt, limiting exposure to foreign exchange risk.

Therefore, the strengthening of the ringgit is expected to lower interest payments and maturing debt, easing the financial burden on the federal government.

This response also addressed a question from Sim Tze Tzin (PH-Bayan Baru), who inquired about the impact of the ringgit’s appreciation on the country’s fiscal situation and national debt reduction. — Bernama