Kuala Lumpur (VNA) – Malaysia’s national debt has reached an alarming level, with total domestic and external borrowings amounting to 1.3 trillion MYR (310 billion USD) as of June, representing 64.7% of the country’s gross domestic product (GDP) - just shy of the statutory debt ceiling of 65%.
Former Minister of Economy Rafizi Ramli said the figures underscored the urgent need for comprehensive reform in debt management, warning that even slight economic disruptions could push the national debt beyond safe levels.
If economic growth slows or global oil and food prices surge, the government could face a real risk of breaching the 65% threshold, he said at the Budget 2026 debate on October 13.
Rafizi noted that the figure excludes government guarantees to agencies and government-linked companies (GLCs), as well as public–private partnership (PPP) commitments.
Although the government affirmed that steps are being taken to reduce debt, Rafizi said debt-servicing costs have surged from 40.5 billion MYR in 2022 to a projected 58.3 billion MYR in 2026. That increase nearly wipes out the savings achieved from subsidy reforms, which fell from 67 billion MYR in 2022 to 49 billion MYR in 2025. In other words, all the savings from subsidy cuts are now being used to pay rising interest on debt, he said.
Rafizi urged a complete overhaul of Malaysia’s debt management system, stressing that fiscal responsibility should not remain solely within the purview of the Ministry of Finance.
He called on the Parliamentary Select Committee on Finance and Economy to examine the matter closely, adding that legislative oversight was crucial to reduce both total debt and debt-servicing costs “drastically and sustainably”./.
