GMGF2023 PENTADBIRAN KEWANGAN
REPORT ON PUBLIC DEBT GROWTH IN MALAYSIA
1.0 Introduction
1.1 Concept of Public Debt
Public debt is the total amount of money a government owes to
creditors, both domestic and international (Kudrjashov, 2024). It constitutes a
fundamental component of modern economic systems, serving as a critical
tool for governments to finance their operations and stimulate economic
growth (Shaari et al., 2023). Public debt is the aggregate financial obligations
incurred by the state when it borrows resources from various sources to bridge
the gap between government revenues and expenditures (Gasanov, 2022). The
concept is essential for understanding fiscal sustainability and macroeconomic
stability, as it reflects the government's capacity to meet its current and future
financial obligations without compromising economic development (Chesoli
& Wafula, 2020).
1.2 Types of Debt and Sources of Debt Financing
According to I.V. Kudashkin et al. (2021), public debt is classified
according to several dimensions. The primary distinction is between domestic
debt and external debt. Domestic debt refers to borrowing from sources within
the country, such as government securities, domestically issued bonds, and
loans from local financial institutions. In contrast, external debt involves
borrowing from foreign creditors, international organisations, and overseas
investors. This distinction is important because domestic and external debts
have different implications for economic growth and fiscal sustainability
, GMGF2023 PENTADBIRAN KEWANGAN
(Joshi et al., 2025). Additionally, public debt can be classified as short- and
long-term debt based on maturity periods; productive debt (financing growth-
enhancing projects) and unproductive debt (funding consumption or non-
productive activities); and concessional and non-concessional debt based on
interest rates and terms (Chesoli & Wafula, 2020).
Governments access a variety of debt financing sources (Kudrjashov,
2024). These include government securities and bonds issued in both domestic
and international markets, loans from international financial institutions such
as the International Monetary Fund (IMF) and World Bank, bilateral loans
from other governments, commercial bank lending, and, in some cases, central
bank financing via monetary expansion (Cheberyako & Zakrushevskyi, 2023).
In Malaysia, the government has relied on domestic sources through
Malaysian Government Securities (MGS) and international sources such as
Eurobonds and loans from multilateral institutions (Ramasamy et al., 2024).
2.0 Growth of Public Debt in Malaysia (2014-2024)
Malaysia's public debt has grown significantly over the past decade, mirroring
broader macroeconomic trends and fiscal policy responses to economic challenges
(Hidthiir et al., 2025). From 2014 to 2024, debt accumulation fluctuated due to shifts
in government revenues, expenditure patterns, and external economic conditions.
Between 2008 and 2022, Malaysia experienced complex dynamics in its debt
structure (Ramasamy et al., 2024). The government's response to the COVID-19
pandemic necessitated substantial fiscal expansion measures to combat the economic
downturn and safeguard the economy. During this period, the current account surplus
decreased significantly to RM5.6 billion in the second quarter of 2020, representing
REPORT ON PUBLIC DEBT GROWTH IN MALAYSIA
1.0 Introduction
1.1 Concept of Public Debt
Public debt is the total amount of money a government owes to
creditors, both domestic and international (Kudrjashov, 2024). It constitutes a
fundamental component of modern economic systems, serving as a critical
tool for governments to finance their operations and stimulate economic
growth (Shaari et al., 2023). Public debt is the aggregate financial obligations
incurred by the state when it borrows resources from various sources to bridge
the gap between government revenues and expenditures (Gasanov, 2022). The
concept is essential for understanding fiscal sustainability and macroeconomic
stability, as it reflects the government's capacity to meet its current and future
financial obligations without compromising economic development (Chesoli
& Wafula, 2020).
1.2 Types of Debt and Sources of Debt Financing
According to I.V. Kudashkin et al. (2021), public debt is classified
according to several dimensions. The primary distinction is between domestic
debt and external debt. Domestic debt refers to borrowing from sources within
the country, such as government securities, domestically issued bonds, and
loans from local financial institutions. In contrast, external debt involves
borrowing from foreign creditors, international organisations, and overseas
investors. This distinction is important because domestic and external debts
have different implications for economic growth and fiscal sustainability
, GMGF2023 PENTADBIRAN KEWANGAN
(Joshi et al., 2025). Additionally, public debt can be classified as short- and
long-term debt based on maturity periods; productive debt (financing growth-
enhancing projects) and unproductive debt (funding consumption or non-
productive activities); and concessional and non-concessional debt based on
interest rates and terms (Chesoli & Wafula, 2020).
Governments access a variety of debt financing sources (Kudrjashov,
2024). These include government securities and bonds issued in both domestic
and international markets, loans from international financial institutions such
as the International Monetary Fund (IMF) and World Bank, bilateral loans
from other governments, commercial bank lending, and, in some cases, central
bank financing via monetary expansion (Cheberyako & Zakrushevskyi, 2023).
In Malaysia, the government has relied on domestic sources through
Malaysian Government Securities (MGS) and international sources such as
Eurobonds and loans from multilateral institutions (Ramasamy et al., 2024).
2.0 Growth of Public Debt in Malaysia (2014-2024)
Malaysia's public debt has grown significantly over the past decade, mirroring
broader macroeconomic trends and fiscal policy responses to economic challenges
(Hidthiir et al., 2025). From 2014 to 2024, debt accumulation fluctuated due to shifts
in government revenues, expenditure patterns, and external economic conditions.
Between 2008 and 2022, Malaysia experienced complex dynamics in its debt
structure (Ramasamy et al., 2024). The government's response to the COVID-19
pandemic necessitated substantial fiscal expansion measures to combat the economic
downturn and safeguard the economy. During this period, the current account surplus
decreased significantly to RM5.6 billion in the second quarter of 2020, representing
