Kuala Lampur:The Federal Government collected only five percent of outstanding loan arrears in 2025, amounting to RM465.0 million out of RM9.27 billion.
According to BERNAMA News Agency, The Auditor General's Report 2/2026 on the Federal Government's Financial Statements for 2025 revealed that loan arrears over six years old reached RM5.02 billion, constituting 62.1 percent of the total RM8.08 billion arrears as of December 31, 2025. The report emphasized the need for loan restructuring to aid borrowers in settling repayments due to ineffective collection efforts.
Fresh arrears totaling RM16.15 million emerged post-restructuring, even after loans had been restructured multiple times. The repayment terms for these restructured loans were extended by 10 to 40 years. Consequently, the Federal Government lost the opportunity to recover RM127.33 million in principal balances and RM450.99 million in interest and late-payment interest revenue due to write-offs.
The report recommended that the Finance Ministry enhance its monitoring and enforcement of loan repayments, ensuring prompt follow-up actions or demand notices. Legal actions should be considered against non-compliant borrowers, and stricter financial assessments should precede loan disbursements or restructurings to mitigate potential losses. The Ministry is also advised to evaluate the loan restructuring process to verify its efficacy in restoring borrowers' cash flow and repayment ability.
As of December 31, 2025, recoverable loans from borrowers totaled RM49.22 billion, a decrease from RM49.62 billion in 2024, marking a reduction of RM398.0 million. Interest and late-payment interest balances dropped by 13.1 percent, or RM358.0 million, to RM2.375 billion in 2025 from RM2.733 billion the previous year. This decline in recoverable loans and associated interests resulted from repayments and write-offs.
Recoverable loans are provided by the Federal Government to companies, state governments, statutory bodies, various agencies, cooperatives, and individuals, supporting initiatives such as water supply projects, public housing, and loan repayments.