New loans in Malaysia to fund only beneficial development projects

Malaysia is ensuring that all new loans are channeled exclusively into productive development projects that will benefit the national economy, according to Deputy Finance Minister Liew Chin Tong. This policy is enforced under the Public Finance and Fiscal Responsibility Act 2023 (FRA).

The FRA is designed to bolster the country's fiscal discipline. It sets medium-term targets to reduce the fiscal deficit to below 3% of Gross Domestic Product (GDP) and to ensure the government debt does not exceed 60% of GDP. The act specifically mandates that new borrowing must be used for development purposes that yield economic benefits.

Liew Chin Tong stated in the Dewan Negara that the government is committed to various reforms to maintain fiscal sustainability and manage national debt. These reforms include a gradual fiscal consolidation process, balancing fiscal discipline with economic growth support, and ensuring public welfare is not compromised. Measures like optimizing public spending through targeted diesel and RON95 subsidies aim to redirect savings towards programs benefiting vulnerable groups.

Further strengthening the nation's revenue base, the government is expanding the Sales and Service Tax (SST), implementing e-invoicing, improving tax collection efficiency, and reducing leakages. Institutional reforms in the public service are also underway, including the enforcement of the Government Procurement Act 2025, rationalization of agencies, prioritizing user-pay projects via the Public-Private Partnership Master Plan 2030, and introducing new acts related to service efficiency and state-owned enterprises.