KUALA LUMPUR, Oct 6 — The Federal government's financial performance improved in 2024 with a RM12.22 billion fall in the deficit, bringing the deficit-to-gross domestic product (GDP) ratio to 4.1 per cent against 5.0 per cent in 2023.
According to the Auditor-General's Report, 2024 borrowings also decreased by RM39.26 billion or 16.3 per cent compared with RM241.51 billion in 2023. The Federal government’s revenue rose by RM9.66 billion, or 3.1 per cent, to RM324.62 billion against RM314.96 billion in 2023.
However, the revenue surplus declined by RM0.58 billion, or 15.8 per cent, compared with RM3.69 billion in 2023.
"Additionally, the development fund's deficit balance increased by RM0.32 billion, or 3.1 per cent, compared with 2023's deficit balance of RM10.21 billion.
"The ratio of Federal liabilities to GDP decreased from 81.8 per cent to 81.7 per cent in 2024," the report stated.
However, the Federal govt ought to pay attention to the rise in Federal liabilities amounting to RM86.05 billion (5.8 per cent). This increase includes a rise in Federal debt by RM75.11 billion compared to 2023.
Therefore, it recommends that the Finance Ministry (MOF) strengthen its revenue collection mechanism, particularly with respect to direct tax revenue, to ensure surplus revenue can be utilised to fund development expenditure and reduce the fiscal deficit and reliance on new borrowings.
Additionally, there is a need for more effective measures to collect outstanding receivables and avoid any write-offs that could result in Federal government losses.
"The MOF is also advised to consistently monitor and evaluate Federal government-owned companies' financial management to ensure their viability and to provide appropriate dividend returns to the Federal government," the report said.
Meanwhile, the Federal debt growth rate showed a declining trend, from 11.4 per cent in 2021 to 6.4 per cent in 2024.
"Principal loan repayments due in 2024 declined by RM17.84 billion (12.7 per cent) to RM122.34 billion against RM140.18 billion in 2023, due to a lower level of maturing loans," it said.
In contrast, the national debt servicing expenditure in 2024 rose by RM4.15 billion (9.0 per cent) to RM50.48 billion, compared to RM46.33 billion in 2023, to cover interest payments on the remaining RM1.25 trillion Federal debt as of December 31, 2024.
Therefore, the National Audit Department has recommended that the Federal government ensure prudent debt management to reduce the risk exposure of a Federal debt default.
"Fiscal consolidation measures must be continued to ensure that new borrowings remain lower than during the pandemic period, without hindering the country's economic growth.
"Subsequently, the debt level should not exceed 60 per cent of GDP in the medium term, as stipulated under the Public Finance and Fiscal Responsibility Act 2023," it said.
Additionally, the Federal government has been advised to monitor new borrowings used to repay maturing loans, as it will need to allocate funds to settle RM490.02 billion in maturing loans over the next five years.
