The Federal Government’s financial performance improved in 2025, with its revenue surplus rising by RM2.184 billion and its deficit narrowing by RM3.878 billion from the previous year.
The Auditor General’s Report (LKAN) 2/2026 said the deficit-to-Gross Domestic Product (GDP) ratio fell to 3.7 per cent in 2025 from 4.1 per cent in 2024, beating the 3.8 per cent target set in the 2025 Budget.
“This achievement is better than the 3.8 per cent target set in the 2025 Budget. It lays a solid foundation for achieving the medium-term deficit target of below three per cent,” the National Audit Department said in a statement.
The Auditor General also issued an Unmodified Opinion, accompanied by an “Other Matters” paragraph, on the Federal Government’s Financial Statements for 2025.
The report, tabled in the Dewan Rakyat today, covers the Federal Government’s financial statements, activities of ministries and departments, as well as state governments, agencies and state-owned companies.
The report said the Federal Government’s debt growth rate slowed from 10.2 per cent in 2021 to 5.9 per cent in 2025.
New borrowings also fell 8.2 per cent to RM185.577 billion in 2025 from RM202.248 billion a year earlier.
Of the new borrowings, RM106.144 billion was used to repay principal on maturing loans while RM75.560 billion was transferred to the Development Fund to finance development projects.
Among the key audit areas were recoverable loans, payments from special trust accounts, contractor advances, accounts receivable for utility relocation costs and the Littoral Combat Ship project.
The audit found that collection of arrears for recoverable loans remained low, with RM465 million, or five per cent, collected from total arrears of RM9.273 billion in 2025.
The Auditor General said new arrears continued to accumulate even after loans were restructured.
The Federal Government also wrote off RM578.32 million in repayment arrears in 2025, comprising RM127.33 million in outstanding principal and RM450.99 million in interest and late-payment interest involving 23 loans.
“The Auditor General recommends that the Ministry of Finance strengthen monitoring and enforcement, tighten risk assessments and re-evaluate the effectiveness of loan restructuring,” the statement said.
