KUALA LUMPUR (March 3): The government remains committed to reducing the deficit with a projection of 3.8% in 2025, said Finance Minister II Datuk Seri Amir Hamzah Azizan.

He emphasised that the main commitment of the Madani government is to gradually and consistently reduce the deficit rate, from 5.5% in 2022 to 5% in 2023, and then to 4.1% in 2024.

In line with the reduction in the deficit, this will reduce the growth of total debt by lowering the new debt issuance each year, with the government’s borrowings decreasing from nearly RM100 billion in 2022 to RM92.6 billion in 2023, and then to around RM77 billion in 2024.

“This declining trend demonstrates the government’s commitment to ensuring that the debt-to-gross domestic product (GDP) ratio is reduced so that it does not exceed 60%, and that a fiscal deficit of 3% can be achieved in the medium term, as stipulated in the Public Financial Act and Fiscal Responsibility Act (FRA) 2023.

“Therefore, in general, we are on track to achieve the targets outlined in the FRA by the end of 2028, starting with achieving a 3% deficit,” he said when winding up the debate on the Supplementary Supply Bill (2024) 2025 at the policy stage.

Amir Hamzah said that one of the government’s strategies in Budget 2025 is to reduce the allocation for development expenditure to RM86 billion, in line with the reduction of the fiscal deficit. 

However, the government will also implement public-private partnership (PPP) projects valued at RM9 billion and a commitment to direct domestic investment by government-linked investment companies (GLIC) amounting to RM25 billion.

This strategy increases public investment to RM120 billion for 2025 to stimulate growth, even with a lower level of new debt, he said. 

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