As of 2023, Malaysia's government debt reached RM1.173 trillion, reflecting an increase of RM92.918 billion (8.6%) from the previous year. This figure represents 65.4% of the country's GDP, with RM1.143 trillion sourced from domestic loans and RM29.851 billion from foreign loans. Notably, over 66% of federal debt is set to mature within the next decade, raising concerns about the sustainability of this debt load [42c410c1].
In comparison, the United States has a debt-to-GDP ratio of 129%, while Japan's stands at a staggering 217%. Although Malaysia's debt levels are lower than those of these major economies, the government recognizes the need for careful management to prevent future fiscal crises [42c410c1].
The Malaysian government has set an ambitious goal to reduce its debt to 60% of GDP by 2030. To achieve this, it plans to decrease the fiscal deficit from 5.0% in 2023 to 4.3% in 2024. The introduction of the Public Finance and Fiscal Responsibility Act 2023 aims to enhance debt management and ensure that borrowing is used effectively for growth-generating projects [42c410c1].
Despite these measures, there are growing concerns about future generations potentially bearing the financial burden of current debt levels. Analysts emphasize the importance of utilizing debt wisely to foster economic growth, which is crucial for maintaining the nation's financial health [42c410c1].
In the broader context of global debt, the International Monetary Fund (IMF) has warned that global public debt levels are projected to reach an unprecedented US$100 trillion by the end of 2024, largely driven by significant borrowing from countries like China and the United States. Kristalina Georgieva, the head of the IMF, has highlighted that while inflation rates are officially declining, the cost of living remains high, leading to public discontent [af1e6557][a05187b9].
The IMF's Fiscal Monitor Report indicates that interest payments on this debt are consuming an increasing share of government revenue, raising concerns about fiscal sustainability worldwide. The report warns that current fiscal tightening efforts are deemed insufficient, and debt projections often underestimate actual outcomes [af1e6557].
As Malaysia navigates its own fiscal challenges, it must also consider the global economic landscape, where rising inflation and fiscal pressures are prevalent. The implications of high national debt are profound, correlating with low economic growth in many countries, including Japan and Greece, which have debts exceeding 200% of their GDP [5c4f83fc].
In conclusion, while Malaysia's debt levels are currently manageable compared to some global counterparts, the government must remain vigilant and proactive in its fiscal policies to ensure long-term economic stability and prevent future generations from facing undue financial burdens [42c410c1].