This will be yet another reduction in borrowings from RM100 billion each in 2021 and 2022 and RM93 billion in 2023.

Johan said the target of 60% in debt-to-GDP ratio will be achieved through fiscal consolidation.

The annual fiscal deficit has come down from 5.6% of GDP in 2022 to 5% in 2023. The target for 2024 is 4.3%.

Johan said that steps to reduce the annual deficit will be achieved by retargeting subsidies, doing away with direct negotiations for government projects in favour of tenders and exercising greater prudence in spending, such as overseas travel.

According to the finance ministry, government debt rose by RM50 billion to RM1.22 trillion as of the end of April 2024 compared with RM1.17 trillion at the end of 2023.

Johan, who spoke with Bernama on the sidelines of the launch of the National Tax Conference 2024 here yesterday, explained that the value of debt will continue to rise as long as the government incurs a fiscal deficit.

On the other hand, the government will continue to incur a deficit as long as it has to borrow to invest in essential infrastructure such as hospitals, schools, roads and public service facilities.

Johan said that to achieve a more sustainable government debt level, the annual fiscal deficit has to be reduced to a level where borrowings do not exceed economic growth.

However, he said, the government will not reduce the annual fiscal deficit too sharply given the need to support national development, the infrastructure needs for the rakyat and the momentum of economic growth.

Prime Minister Anwar Ibrahim, who also spoke at the same event, said that to achieve the lower annual borrowing requirement, the government has to ensure prudent spending, avoid wastage and only borrow when necessary for development purposes that truly serve the needs of the rakyat.

“Retargeting of subsidies is a key component in the government’s comprehensive fiscal reform efforts to reduce the government’s annual borrowings,” he said.

“Other efforts include reducing wastage by tackling corruption and implementing a more efficient manner of enforcing the law and taxation efforts,” Anwar, who is also finance minister, added.