KUALA LUMPUR: The country's fiscal deficit is targeted to reduce further to 3.8 per cent of gross domestic product (GDP) in 2025, reflecting the government's ongoing commitment to fiscal consolidation.
This reduction will provide ample fiscal space to cushion the impact of global uncertainties and alleviate debt burden over the long term.
Meanwhile, the primary balance is forecast to record a lower deficit of 1.2 per cent of GDP.
The government in its Economic Outlook 2025 report said the prudent fiscal approach aims to boost economic resilience, advancing sustainable growth and development while enabling the government to effectively manage its risk exposure.
The federal government's gross borrowings is expected to consolidate to around 10 per cent in 2025.
It is estimated that gross borrowings will stand at RM206 billion in 2024, down from RM226.6 billion in 2023.
The federal government debt growth continues to demonstrate a downward trend, reducing from 8.6 per cent to around 6 per cent in 2025.
The debt-to GDP ratio however is expected to remain around 64 per cent in 2025.
The medium-term target is to bring it down to 60 per cent of GDP.