Speaking in the Dewan Rakyat today, Lim said the increase from RM1.25 trillion at the end of last year was to support strategic development expenditure, including infrastructure, education, healthcare, and social protection programmes.
She said the fiscal deficit reduced from 5.5% of the gross domestic product (GDP) in 2022 to 4.1% last year, and is projected to fall further to 3.8% in 2025.
Debt growth is also slowing, from 10.2% in 2022 to 6.4% in 2024, with a further drop to around 6% projected for 2025.
“This is in line with the government’s commitment to achieving a fiscal deficit target of below 3% of GDP, and keeping the debt-to-GDP ratio under 60% in the medium-term, as provided under the Public Finance and Fiscal Responsibility Act,” Lim said in response to a question from Ngeh Koo Ham (PH-Beruas) during an oral question-and-answer session.
Lim also outlined several control measures to curb debt growth, including broadening revenue base, rationalising subsidies, and enforcing strict guidelines for government guarantees and public-private partnerships.
She said future borrowings would also be limited to high-impact development projects, while government guarantees would be capped at 25% of the GDP under the Public Finance and Fiscal Responsibility Act.
To strengthen governance, enhance accountability, and improve institutional efficiency, the government is in the process of drafting the Government Procurement Bill and another bill to regulate state-owned enterprises, she added.
BMI, a Fitch Solutions company, previously reported that Malaysia would likely miss its fiscal deficit target this year, as spending was seen exceeding projections and revenue might fall.
Separately, Lim said household debt in Malaysia stood at RM1.65 trillion as at the end of March 2025, or 84.3% of the GDP.
She said this should be viewed in the context of household financial assets remaining significantly higher than the total debt, indicating that the public’s overall financial position remained strong.
“On aggregate, household financial assets continue to exceed debt by 2.1 times, providing a solid buffer for households,” she said in response to Awang Hashim (PN-Pendang), who inquired about the debt-to-GDP ratio.
She added that the government and Bank Negara Malaysia remained committed to assisting credit users who faced financial difficulties.