KUALA LUMPUR: The government is committed to reducing the country's new debt as a short-term measure to improve the country's financial capacity.
Prime Minister Datuk Seri Anwar Ibrahim said in 2021 and 2022, the country's new debt stood at RM100 billion before it was gradually reduced.
"The amount was reduced to RM93 billion in 2023 and further reduced to RM86 billion this year.
"From RM100 billion under the previous administration, we reduced it to RM86 billion, but this cannot be reduced dramatically because we still need a development agenda," he said in his keynote address at the National Tax Conference 2024 today.
Present at the event were Deputy Finance Minister Lim Hui Ying, Finance Ministry's Treasury secretary-general Datuk Johan Mahmood Merican, Chartered Tax Institute of Malaysia president Soh Lian Seng and the Inland Revenue Board (LHDN) chief executive officer Datuk Dr Abu Tariq Jamaluddin.
Anwar said the reduction was also a result of the government's efforts to reduce its fiscal deficit.
"This year, it is projected to further decrease to 4.3 per cent of the country's Gross Domestic Product (GDP), with the country's fiscal deficit last year (2023) at 5.0 per cent and in 2022 at 5.6 per cent.
"To achieve that, the country needs to be managed well. There must be no leakages or misappropriation, or the rakyat and the country will suffer," he said, adding that the government is also committed to lowering the national debt from 64 per cent of GDP to 60 per cent of GDP.
Anwar added that the money borrowed to settle previous debts constitutes the biggest burden on the government.
Citing the 1Malaysia Development Bhd (1MDB) case, he said that the government paid RM48 billion in debts incurred by it.
"Whereas the amount can be used for the benefit of the people, such as for building schools, hospitals, or even for salary adjustments for civil servants.
"Therefore, I emphasise that the management of the country's economy is crucial. There must be no wastage or misappropriation because it is the people and the nation that will bear the burden.
"Can I ignore that debt and refuse to pay it, because it was incurred under the previous administration? No, I cannot.
"Even though I am the Prime Minister, I am bound by past events, and at the same time, I have to consider future generations as well," he said.
In his speech, Anwar also took a jab at the opposition for accusing him of not giving the right answer on the country's debt.
"I was 'attacked' on social media by the opposition, accusing me of not giving the right answer on the reasons behind the increase in the national debt.
"They say that the debt keeps increasing, but they don't see the real reason why.
"The government borrows money every year to finance development and settle its previous debts," he said.
In his speech, Anwar also urged LHDN to increase its efficiency to ensure better tax collection this year.
He said the board plays a big role in ensuring Malaysia's financial stability in the future.
He said that the country's tax base is small at 11.7 per cent of the country's GDP, compared to Vietnam at 17 per cent, the Philippines at 18 per cent, and Singapore at 13.8 per cent.
"Therefore, efficiency is more challenging than in other countries with bigger tax bases."
He said efficiency needs to be improved with various efforts such as digitisation and new measures that meet current needs.
"I hope that the IRB can increase the revenue from tax collection beyond the projection.
"Every cent and ringgit must be paid, but at the same time, it should not burden the people and companies more than the set limit," he said.