PUTRAJAYA — The government still has to pay debt obligations inherited from previous administrations, including liabilities linked to 1Malaysia Development Bhd (1MDB), said Prime Minister Datuk Seri Anwar Ibrahim.
The government is still making 1MDB interest payments as well as paying previous government debts, he said to Finance Ministry (MoF) staff at their monthly assembly today.
At the same time, Putrajaya is also working to reduce its reliance on new borrowing.
This approach forms part of efforts to strengthen public finances while maintaining funding for development and essential services, Anwar added.
“National debt has become a controversial issue, as the overall debt has increased. It’s true, because old debts must be repaid.
“Some claim all 1MDB debts have been settled. I don’t know which book they got the information from, (but) it’s not true,” Anwar, who is also the Finance Minister, said.
“But new debt is important. A responsible government means you only borrow what you have to, in order to manage the economy. But you always plan ahead; you should not burden the future generation to pay for excess of the present,” he said.
As for the 1MDB-related payments, the government had paid RM42.5 billion as at Aug 31, 2026, towards commitments that included principal repayments, interest, legal fees and operational costs, the MoF had said recently in a written parliamentary reply.
If there is no additional fund recovery in the future, the government will still have to bear the remaining obligation of RM20.1 billion, MoF added in its reply.
Government-guaranteed Islamic medium-term notes linked to 1MDB carry a further RM8.9 billion in obligations, comprising RM5 billion in principal and RM3.9 billion in interest, with maturity in 2039, Deputy Finance Minister Liew Chin Tong told Parliament in July.
MoF said legal action and international cooperation would continue to maximise the recovery of misappropriated 1MDB assets and reduce the financial burden on the country.
Meanwhile, the government’s debt management strategy focuses on moderating debt accumulation and rebuilding fiscal buffers while continuing to finance development, with greater mobilisation of private capital aimed at reducing reliance on public borrowing. – October 19, 2026