KUALA LUMPUR, Jan 22 — Government debt surged by 36 per cent between 2019 and 2022 as the Covid-19 crisis forced Putrajaya to borrow heavily, leaving subsequent administrations under mounting pressure to service the rising obligations, Deputy Finance Minister Liew Chin Tong told Parliament this morning.

Liew said emergency fiscal measures rolled out to cushion the pandemic’s economic fallout had pushed the government’s debt-servicing coverage ratio to 16 per cent in 2025, up from just over 12 per cent in 2019. 

This backdrop ultimately prompted the Anwar administration to enact the Fiscal Responsibility Act, or Act 850, the deputy minister said, allowing tighter spending discipline as it works to consolidate public finances and pare down the deficit.

“Federal government debt during that period (2019-2022) rose to RM286.6 billion, a 36 per cent increase or a debt-to-GDP ratio of 60.2 per cent in 2022 compared to 52.4 per cent in 2019,” Liew said.

Last October the federal government said its DSC would likely increase by 7.6 per cent to RM54.3 billion in 2025, accounting for 16.3 per cent of total revenue compared to a 9.0 per cent increase of RM50.5 billion or 15.6 per cent in 2024.

The slower growth of DSC reflects the government’s commitment to narrowing the fiscal deficit from 4.1 per cent in 2024 to 3.8 per cent in 2025, the Ministry of Finance (MoF) said.

Prime Minister Datuk Seri Anwar Ibrahim had said he would continue to reduce new borrowings to meet the deficit target. 

New borrowings reduced from RM100 billion in 2021 to 2022 to RM92 billion in 2023, and down further to RM77 billion in 2024, Liew told Parliament.

“This is projected to be around RM75 billion in 2025, with ongoing efforts to continue the reduction in 2026. These measures have yielded results, with DSC growth being reduced from 12.3 per cent in 2023 to 9 per cent in 2024 and 6.4 per cent in 2025,” he said.