KUALA LUMPUR - The federal government is taking several control measures to ensure its debt level is under control and well managed, according to the Finance Ministry.
Up till the end of 2022, it is clear from the ministry that the government's debt amounted to RM1,079.6 billion or 60.4 per cent of Gross Domestic Product (GDP), of which domestic debt was as much as RM1,050.1 billion while offshore loans amounted to RM29.5 billion.
"Among those measures is to continue the gradual fiscal consolidation measures to ensure that new loans are lower than during the pandemic without affecting the country's economic recovery.
"In addition, the ministry will increase the efficiency of spending, control and ensure that allocations are spent effectively and reduce leakage and waste.
"For that, the government also needs to carry out a Public Expenditure Review including rationalisation measures and expenditure priorities,” said the Finance Ministry in a written response published on the Parliament website today.
The Finance Ministry said this in response to a question from Datuk Seri Ronald Kiandee (PN-Beluran) who asked the ministry to state the government's latest debt level and the steps being taken to manage the debt effectively.
Next, according to the ministry, it will also ensure that operating expenses are always financed through national revenue and that part of the revenue can cover part of the development expenses as well as expand the revenue base and ensure sustainable revenue collection where the government needs to have a current balance surplus and not borrow for operating expenses.
For the next strategy, the ministry will ensure that debt service charges are controlled and do not exceed 15 per cent of revenue and ensure that government loans are solely to finance development expenses that are focused on high-impact projects that provide returns to the country and the people in the long term.
The government will also prioritise domestic loans, taking into account high liquidity and cheaper loan costs and not be exposed to foreign exchange risk and strengthen the institutional and legal framework by implementing fiscal reform measures including introducing the Fiscal Responsibility Act
The Act which is expected to be presented this year is capable of further strengthening governance, transparency and accountability in fiscal management, the ministry explained.
"In addition, debt control and reduction measures as well as fiscal consolidation need to be supported by the implementation of a medium-term revenue strategy.
"This strategy includes improving the existing taxation system, expanding the revenue base, exploring potential revenue from the informal sector and focusing on more targeted tax incentives.
"All these efforts and measures are able to strengthen the government's financial position, rebuild the fiscal space and further reduce the national debt,” added the Finance Ministry.- BERNAMA