Collected just 5pc of RM9.273b in loan arrears, says Audit Dept

KUALA LUMPUR — The Federal Government’s financial performance improved in 2025, with its revenue surplus increasing by RM2.184 billion and its deficit narrowing by RM3.878 billion compared with 2024.

In a statement on the Auditor General’s Report (LKAN) 2/2026, the National Audit Department said the deficit-to-Gross Domestic Product (GDP) ratio also declined from 4.1 per cent to 3.7 per cent in 2025.

“This achievement is better than the 3.8 per cent target set in the 2025 Budget. It lays a solid foundation for achieving the medium-term deficit target of below three per cent,” the statement said.

Based on the audit conducted, the Auditor General issued an Unmodified Opinion, accompanied by an “Other Matters” paragraph, on the Federal Government’s Financial Statements for the year 2025.

LKAN 2/2026, which covers the Federal Government’s Financial Statements for 2025, the activities of Federal Government ministries and departments, as well as the financial statements and activities of state governments, agencies, ministries and departments, and the management of state-owned companies, was tabled in the Dewan Rakyat today.

According to the statement, the Federal Government’s debt growth rate over the five years from 2021 to 2025 declined from 10.2 per cent to 5.9 per cent.

It said debt management also showed positive progress, with new borrowings decreasing by 8.2 per cent from RM202.248 billion in 2024 to RM185.577 billion in 2025.

The new borrowings were primarily used to repay RM106.144 billion in principal on maturing loans and to transfer RM75.560 billion to the Development Fund to finance development projects.

The key audit areas highlighted in LKAN 2/2026 included the management of recoverable loans, payments from special trust accounts, contractor advances, accounts receivable for utility relocation costs and the management of the Littoral Combat Ship (LCS) project, based on interim audits conducted up to July 2026.