“The ratio of federal liability to gross domestic product (GDP) was at 83.8% in 2020, higher than the 71.3% in 2019,” it said.

The report was of the view that the preparation of a clear work procedure, understanding and compliance with financial regulations, as well as close supervision of the duties of officers will create a work culture and practices that are of quality and with integrity.

The audit department also proposed that the government improve its expenditure management discipline to generate revenue, and monitor its commitment on loan repayment.

“This is important so that surplus revenue can be enhanced to fund development expenditure, and hence reduce the dependency on new loans,” the report said.

Cooperation from all levels as well as effective continuous monitoring at ministerial level are needed to ensure financial discipline, the report added.

The audit department also proposed that the government set a consistent policy in accounting for the premium and discount from the issuance of government debt security. It said the government must also ensure that its development fund is utilised for projects and programmes that have high multiplier effects on the nation’s economic activities.

The ceiling must be set on debt guarantees made by statutory bodies and companies to avoid additional burden commitment to the government if the statutory bodies and companies face difficulties in fulfilling their obligations.