KUALA LUMPUR: The Federal government debt to gross domestic product (GDP) ratio is expected to stay around 64 per cent of GDP in 2024 and 2025, well above the 60 per cent of GDP medium term target.
This is despite a downtrend in debt growth from 8.6 per cent in 2023, to 7.5 per cent in 2024 and to around 6 per cent in 2025.
As at end of June 2024, the overall federal government debt recorded RM1.2275 trillion or 63.1 per cent of GDP.
Meanwhile, the federal government's debt service charges (DSC) in 2024 is estimated at RM50.8 billion, or 15.8 per cent of revenue, due to continuous budget deficit.
In 2023, DSC was RM46.3 billion, or 14.7 per cent of revenue.
The DSC is mainly for interest and profit payments of of domestic instruments estimated at RM50 billion, while the remaining RM800 million is for offshore borrowings.
The borrowing strategy among others aims at managing refinancing risk effectively by maintaining a well-spread maturity profile.
As at end of June 2024, the composition of outstanding debt with remaining maturities of more than five years increase to 61.7 per cent.
Accordingly the proportion of securities with remaining maturities of five years and below reduced to 38.3 per cent.