Malaysia strives to lower national debt

Malaysian Prime Minister Anwar Ibrahim said the government will work to gradually reduce the national debt and budget deficit, without resorting to raising taxes that hurt the poor.
A currency exchange counter in Kuala Lumpur, Malaysia. (Photo: AFP/VNA)
A currency exchange counter in Kuala Lumpur, Malaysia. (Photo: AFP/VNA)

He told the media recently that Malaysia’s debt has reached the ceiling and should gradually go down.

The country had raised the debt limit to 60% of gross domestic product (GDP) from 55% in 2020 in the early days of the COVID-19 pandemic, and lifted it further to 65% in 2021 to make room for additional borrowings to fund fiscal stimulus.

The law under which the ceiling was raised lapsed on December 31, 2022. Malaysia’s actual debt is at 61% of GDP.

While Malaysia remains A-rated by credit agencies Moody’s Investors Service and S&P Global Ratings, a reduction in government debt ratio will be key to winning a higher credit score from Fitch Ratings Ltd., which is currently the only one of the three main rating companies to have a lower BBB+ rating on the country.

Addressing a dialogue session on budget on January 17, the PM said Malaysia’s national debt including liabilities has reached 1.5 trillion RM (about 346 billion USD), equivalent to 80% of GDP.