Govt’s finances improved in 2025, says audit dept

The federal government’s financial performance improved in 2025, with its revenue surplus increasing by RM2.184 billion and its deficit narrowing by RM3.878 billion compared with 2024.

In a statement on the auditor-general’s (A-G) report released today, the national audit department said the deficit-to-GDP ratio also declined from 4.1% to 3.7% in 2025.

“This achievement is better than the 3.8% target set in the 2025 budget. It lays a solid foundation for achieving the medium-term deficit target of below 3%,” it said.

The A-G’s report covers Putrajaya’s financial statements for 2025, the activities of federal ministries and departments, the financial statements and activities of state governments, agencies, ministries and departments, as well as the management of state-owned companies.

The audit department said the federal government’s debt growth rate from 2021 to 2025 declined from 10.2% to 5.9%.

It said debt management also showed positive progress, with new borrowings decreasing by 8.2% from RM202.248 billion in 2024 to RM185.577 billion in 2025.

The new borrowings were primarily used to repay RM106.144 billion in principal on maturing loans and to transfer RM75.560 billion to the development fund to finance development projects.

Low arrear collection for recoverable loans

The department said the collection of arrears for recoverable loans remained low, with only RM465 million, or 5%, of some RM9.273 billion owed collected in 2025, highlighting the need for loan restructuring.

However, new arrears continued to accumulate even after the loans were restructured.

The federal government also wrote off repayment arrears totalling RM578.32 million in 2025, comprising RM127.33 million in outstanding principal and RM450.99 million in interest and late-payment interest, involving 23 loans.

“The A-G recommends that the finance ministry strengthen monitoring and enforcement, tighten risk assessments and re-evaluate the effectiveness of loan restructuring,” it said.

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