Malaysia can no longer continue with high budget deficit, seeking to reduce debts: PM Anwar

PUTRAJAYA: Malaysian Prime Minister Anwar Ibrahim on Wednesday (Feb 8) warned that the country cannot continue with a high budget deficit. 

In a press conference after a Cabinet meeting, Mr Anwar said that the government is seeking to reduce its debts without affecting its development programmes.

“The country can no longer survive with a high (budget) deficit and (we) seek to reduce (the debts) and (with) reductions that do not burden our development programmes. 

“I have received some additional feedback from the ministers (on this matter),” said Mr Anwar. 

Last month, during his address at the 2023 Budget Dialogue, Mr Anwar, who is also the finance minister, said that Malaysia’s national debt has reached RM1.5 trillion (US$350 billion). 

He was quoted as saying by the New Straits Times that the figure, which includes liabilities, has already exceeded 80 per cent of the gross domestic product (GDP) and that this has a direct impact on the economy.

Mr Anwar said the figure also suggests that the country’s budget deficit will widen further than the earlier estimate of 5.8 per cent of the GDP for 2022.

“The problem with our debt is it has already touched RM1.2 trillion and if liabilities are included, the debt is RM1.5 trillion,” he said. 

In 2018, then-prime minister Mahathir Mohamad revealed that the country was saddled with more than RM1 trillion in debt following the opposition coalition's win in the 2018 General Election. Dr Mahathir then blamed the previous government led by former protege Najib Razak on the issue.

And just last year, then finance minister Tengku Zafrul Abdul Aziz said that the country’s debt stood at RM1.045 trillion at the end of June 2022. This corresponds with 63.8 per cent of Malaysia’s GDP then.

ECONOMIC CHALLENGES CONSIDERED WHEN TABLING 2023 BUDGET

Separately, Mr Anwar was quoted as saying by Bernama on Wednesday that the 2023 budget will consider the current economic challenges and efforts to attract investments.

He said the government is also taking into account the country’s competitiveness, the speed of business approvals as well as several new initiatives - including digitisation, sustainable consumption and production of natural resources in the downstream process - in the 2023 budget.

“We are trailing behind (in those areas) compared to Indonesia, Thailand and Vietnam. 

“As such, we must address these issues to ensure we remain competitive,” he said while addressing the finance ministry’s monthly gathering in Putrajaya. 

Mr Anwar was quoted as saying by The Star on Wednesday that the government also proposed measures “which are radical” to recharge the economy. 

"I told my team we must make things clear and not give vague statements. If we have this much debt, we must give the actual figure,” he said at the finance ministry’s monthly gathering. 

Mr Anwar’s unity government is scheduled to table its first national budget to Parliament on Feb 24. 

The government Budget that was tabled by the previous administration under former Prime Minister Ismail Sabri in October last year was not debated due to the dissolution of Parliament that led to the General Election on Nov 19 last year.