What percentage of new loans in 2020 funded maturing loan principals?

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Fifty-Four Percent of New Loans in 2020 Were Allocated to Repaying Maturing Loan Principals

In 2020, the Malaysian federal government allocated RM98.058 billion, representing 50.4 per cent of its total new loans, towards repaying the principal of maturing loans. This marked a significant increase from the RM83.050 billion used for the same purpose in 2019. The Auditor-General's Report on the Federal Government Financial Statement highlighted this practice as a point of concern, noting that such repayments should ideally be funded by surplus revenue rather than new borrowings.
Significant Increase in Loan Principal Repayments

The total amount of new loans taken by the government in 2020 reached RM194.555 billion. Out of this substantial sum, RM98.058 billion was specifically earmarked for servicing existing debt principals. This figure represents a notable rise of RM15.008 billion compared to the RM83.050 billion allocated for this purpose in the preceding year, 2019, indicating an escalating reliance on new borrowings to manage existing financial obligations.
Auditor-General's Concerns on Debt Management

Datuk Nik Azman Nik Abdul Majid, the Auditor-General, expressed that the government's dependence on new loans to finance the repayment of maturing loan principals is a worrying trend. While the Auditor-General's certificate for 2020 was clean, the report emphasized the need for closer attention to federal debt status. The Auditor-General suggested that loan principal repayments should ideally be covered by surplus revenue, a practice that was not being followed to the extent desired.
Impact of Covid-19 on Government Borrowing

The Auditor-General acknowledged that the year 2020 was uniquely challenging due to the Covid-19 pandemic. The government was compelled to implement various measures to support the healthcare system and provide aid to the populace in combating the virus. These extraordinary circumstances led to increased government expenditure and, consequently, a greater reliance on borrowing, including for the repayment of maturing loan principals.
Recommendations for Prudent Financial Management

In light of these findings, the Auditor-General's department proposed a strategy of prudent spending. The recommendation emphasized ensuring that all development expenditures are financed through loans that can be serviced within reasonable costs and according to schedule, while actively preventing leakages or wastage. This advice underscores the importance of sustainable financial practices, particularly in managing national debt.

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What percentage of new loans in 2020 funded maturing loan principals?

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