Rafizi: National Debt To Decline If Malaysia Succeeds In Cutting Fiscal Deficit To 3.5%

Success in lowering the fiscal deficit to the targeted 3.5 per cent of Gross Domestic Product (GDP) by end-2025 will signal that the national debt will decrease in the years that follow, said Economy Minister Rafizi Ramli.

He said if the level can be reduced as per target, it would assure foreign investors that the government has good fiscal discipline.

“With the national debt at RM1.5 trillion, missing the fiscal deficit target would not help in reducing the national debt or improving the country’s fiscal position.

“But if we continue to achieve the deficit target by 2025, we will start to see the debt falling,” he said in his speech at the 12th Malaysia Plan mid-term review engagement session with the Sabah government in Kota Kinabalu earlier today (June 27).

Rafizi said the Federal Government’s priority on strengthening the fiscal position is not just aimed at reducing debt but also reassuring international investors that the present government is disciplined and spends prudently.

He said that to manage spending, the approach taken with regard to the B40, M40 and T20 groups needs to be more accurate by measuring each household’s net disposable income to ensure the subsidies are targeted, as they require RM86 billion in annual expenditure.

“We have already implemented (targeted) electrical subsidies based on existing policies. The government is expected to save RM6 billion to RM8 billion a year on electricity subsidies,” he said, adding that diesel and RON95 subsidies will be the next area of focus.

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