Malaysia to moderate borrowing in 2027 as debt reaches RM1.38 trillion
The government will focus on limiting debt accumulation, rebuilding fiscal buffers and managing borrowing costs and refinancing risks.
Malaysia plans to curb the pace of borrowing in 2027, with federal debt reaching RM1.38 trillion at end-June 2026, according to the Ministry of Finance. Its 2027 Fiscal Outlook and Federal Government Revenue Estimates report sets out priorities for restraining debt growth and restoring fiscal buffers.
Debt rose by RM58.1 billion, or 4.4%, but fell relative to gross domestic product. The debt-to-GDP ratio stood at 63.1%, down from 65.2%, moving towards the government's medium-term goal of below 60%.
Gross new borrowing for 2026 is projected to exceed RM207 billion, compared with RM181.7 billion the previous year. The ministry attributed the increase mainly to refinancing requirements as debt falls due. Net borrowing is forecast at RM78.6 billion, against RM75.6 billion previously.
The ministry said ringgit-denominated domestic issuance would remain central to its financing strategy to reduce exposure to currency fluctuations. It also intends to favour medium-to-long tenures to spread maturities and manage refinancing risks.
At end-June 2026, domestic financing represented 98.8% of federal debt. Debt with more than five years remaining until maturity accounted for 63.9%, while the weighted average maturity of outstanding securities stayed at 9.6 years.
Resident investors owned RM1.08 trillion, representing 78.5% of federal debt. The Employees Provident Fund was the largest holder with 30.5%, followed by banking institutions with 28.5%. Non-residents held 21.5%.
