Higher economic growth and fiscal surplus can swiftly reduce the debt-to-GDP ratio, according to an MoF debt sustainability analysis.
The total federal government debt stood at RM1.147 trillion or 62% of gross domestic product as of August 2023.
As of August 2023, total federal government debt stood at RM1.147 trillion or 62% of GDP with 97.4% denominated in ringgit while the remaining 2.6% was in foreign currencies. However, the study finds that if the current fiscal policy remains unchanged, the country’s debt level will reach an alarming level by 2028 based on two respective scenarios.
The debt-to-GDP projection in both scenarios will exceed the 65% statutory debt limit imposed by the government. This exceeds not only the country’s 65% statutory debt limit but also the 70% threshold set by the IMF and the World Bank under the DSA framework.
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