Federal Loans Are Only For Development, Not Operating Expenses – Amir Hamzah

KUALA LUMPUR, Nov 4 (Bernama) -- The government stressed that loans to cover current operating expenses have never occurred, rather every loan is made for the purpose of developing the country's future, said Finance Minister II Datuk Seri Amir Hamzah Azizan.

He said Malaysia has recorded continuous deficit spending since 1998 until now, while every year the government has to finance the fiscal deficit through loans to cover national development spending.

"We need to accept the reality that the sharp increase in the national debt level began in 2020, when the previous government had to take out additional loans to finance the stimulus package and economic recovery to protect the people and support businesses affected by COVID-19.

"As a result, the federal government's debt increased from RM793 billion or 52.4 per cent of gross domestic product (GDP) in 2019 to RM1.079 trillion or 60.2 per cent of GDP at the end of 2022 — an increase of RM286.6 billion in three years," he said when winding up the debate on the Supply Bill 2026 (Budget 2026) Policy Stage in the Dewan Rakyat today.

Amir Hamzah said the fiscal deficit rate has consistently decreased every year from 6.4 per cent in 2021 to 4.1 per cent in 2024, and is projected to further decrease to 3.5 per cent in 2026.

“Along with that, the total new government borrowing has also decreased to around RM77 billion in 2025 compared to RM100 billion in 2021 and 2022, while the debt growth rate is projected to decrease to around six per cent in 2025,” he added.

He added that the government always ensures that the debt level is below the statutory limit of 65 per cent of GDP as set under the Loans (Local) Act 1959 and the Government Financing Act 1983, while offshore loans of RM22.8 billion are also still below the maximum allowed level of RM35 billion.

He said the weighted average cost of government borrowing was recorded lower at 3.79 per cent for the period of January to August 2025, with the average maturity for the entire 2025 issuance projected to be around 12.6 years.

The parliament sitting continues tomorrow.

-- BERNAMA