Comparing reported economic figures from this year to the previous budget’s projections, he noted that total revenue for 2025 is expected to decrease to RM334 billion – RM5.6 billion less than the projection of RM340 billion.

He said as operating expenditure is projected to increase by RM6 billion next year, if government revenue collection falls short by more than RM6 billion, revenue growth will be too slow compared with the annual rise in operating expenses.

“What is most worrying is that the most toxic expenditure, that is, debt service charges (DSC), continues to increase.

“Of the RM6 billion increase in operating expenditure, two-thirds, or RM4 billion, come from the increase in debt interest payments.

“Next year, RM58.3 billion in DSC needs to be paid, compared with RM54.3 billion in 2025. For every RM1 increase in operating expenditure, 67 sen is for interest payments,” the former economy minister said during the debate on the 2026 supply bill in the Dewan Rakyat today.

Rafizi said the combined domestic and offshore debt stood at RM1.3 trillion, or 64.7% of the size of the national economy, as of June, a figure too close to the ceiling of 65% of GDP.

“If disruptions occur in 2026 – whether due to slower economic growth or geopolitical tensions that drive up crude oil or food commodity prices – the government faces a real risk of national debt exceeding 65% of GDP.

“After having gone through various hardships to reform the subsidy system to be more targeted, because we have not thoroughly reformed our debt management (system), all the savings will be used to pay increasing DSC and interest payments,” he said.

He said Malaysia cannot continue to make large reforms to matters related to the public’s pockets in the name of fiscal strengthening without seriously debating and looking into debt management in Parliament.

“I hope the select committee on finance and economy truly looks into this, because Parliament needs to play a role in drastically reducing debts and DSC,” he said.