Govt borrowed less in 2025, but collected just 5pc of RM9.273b in loan arrears, says Audit Dept

According to the national audit department, Malaysia's federal government experienced a positive financial outlook in 2025. The debt growth rate from 2021 to 2025 decreased from 10.2% to 5.9%, marking a significant improvement. In comparison to the previous year, 2025 saw a revenue surplus of RM2.184 billion and a deficit reduction of RM3.878 billion.

The deficit-to-GDP ratio also declined from 4.1% to 3.7%, surpassing the 3.8% target set in the 2025 budget. This achievement lays a strong foundation for achieving the medium-term deficit target of below 3%, as stated in the audit department's report.

The report covers the financial statements of the federal government, activities of federal ministries and departments, as well as those of state governments, agencies, and ministries. It also includes the financial statements and activities of state-owned companies. The audit department highlighted that debt management showed positive progress, with new borrowings decreasing by 8.2%.

In 2025, new borrowings amounted to RM185.577 billion, down from RM202.248 billion in 2024. The borrowed funds were primarily utilized to repay RM106.144 billion in loan principal and transfer RM75.560 billion to the development fund for financing development projects.