Malaysia reports improved 2025 fiscal performance and lower deficit

Malaysia’s federal financial performance improved in 2025, according to the Auditor-General’s Report 2/2026. The federal government saw an increase in revenue surplus of RM2.184 billion and a reduction in the deficit to 3.7% of GDP, outperforming the 3.8% target set in the 2025 Budget.

Debt management showed positive trends, with the federal debt growth rate decreasing from 10.2% to 5.9% over the five-year period from 2021 to 2025. New loans decreased by 8.2% to RM185.577 billion, primarily used for repaying matured principal and development project transfers.

However, the report highlighted challenges in loan recovery. The government recovered only 5% (RM465 million) of RM9.27 billion in outstanding loans. The Auditor-General recommended stricter monitoring, legal action against defaulters, and improved risk assessments to prevent further losses.

On the investment side, Petronas contributed RM32 billion in dividends to the government in 2025. Total investment dividends received by the federal government rose to RM39.547 billion, up 1.4% from the previous year.