Why is Madani so Desperate?

The Madani Government seems so desperate to do the following:

1.               Raise electricity tariffs from1 July 2025.

2.               Increase port charges by up to 30%, also starting 1 July 2025.

3.               Expand the sales tax to cover 97% of all goods and impose service tax on education, healthcare, beauty, finance, rentals, and industrial sectors — even fruits, salt, raw sugar and seawater are now taxed; all starting 1 July 2025.

4.               Maintain Petronas’ RM32 billion dividend payouts — same as last year — even though Petronas profits have plunged by 32%, forcing them to retrench over 5,000 employees and freeze all promotions and new hiring until end-2026.

5.               Implement the Stamp Duty Act, 1949 for all contracts; and

6.               Planning to hike RON95 fuel price in the second half of 2025.

The answer is probably “blowing in the wind” (not the Bob Dylan song) but Madani has failed to manage the economy and national debt responsibly. Let’s look at some its actions thus far:

 

(i)              Revenue, Spending & Deficit (Jan–April)

Government Revenue:

 

• 2022 - RM82.0 billion (Q1 still under lockdown, economy reopened in April)
• 2023 - RM98.6 billion
• 2024: RM93.2 billion
• 2025: RM97.1 billion

Even with multiple new and expanded taxes (LVGT, CGT, dividends, SST widening), revenue in 2024 and 2025 is still lower than in 2023.
That means the economy isn’t growing fast enough to generate more tax income or are there leakages?

Next, Government Spending has been on the rise:
• 2022: RM116.5 billion
• 2023: RM122.8 billion
• 2024: RM133.2 billion
• 2025: RM127.8 billion

And the overall budget deficit remains sticky:

• 2022: -RM34.4 billion
• 2023: -RM24.1 billion
• 2024: -RM40.0 billion
• 2025: -RM30.7 billion

The deficits in 2024 and 2025 are worse than in 2023, despite extraordinary one-off support in 2024:

• KWAP dividend: RM5 billion (vs forecast RM3 billion)
• BNM dividend: RM5.25 billion (vs RM2 billion)
• RM2 billion from amendments to the Unclaimed Monies Act
• RM2 billion early payment from Petronas for the Bandar Malaysia land deal

Apart from the final RM4 billion payment from Petronas, most of these revenue windfalls will not recur in 2025.

(ii)       Government Debt and Debt-to-GDP Ratio

As of 16 June 2025, the government has already borrowed a net RM64.28 billion — that’s 79.4% of the RM81 billion debt limit set in Budget 2025, even though only 45.8% of the year has passed.

This means that either they have to cut spending drastically or squeeze the rakyat further to raise more taxes — quickly — because there’s only RM16.7 billion in borrowing room left for the rest of 2025.Due to stagnant revenue and rising spending, government direct debt has soared:

• Nov 2022: RM1.071 trillion
• Jun 2025: RM1.305 trillion
• That’s an increase of RM234.2 billion in just 30 months of Madani.

Debt-to-GDP ratio has also surged from 60.3% to 65.5% by Q1 2025. This shows that debt is rising faster than economic growth. If GDP were truly expanding in a healthy way, this ratio should be going down - not up.

(iii)      Government Debt Servicing Costs (Interest Only)

• 2022: RM41.3 billion
• 2023: RM46.1 billion
• 2024: RM49.8 billion
• 2025: RM54.7 billion

 

 

With an additional RM81 billion in borrowing for 2025, interest payments in 2026 are projected to hit RM63 billion. That’s an increase of RM21.7 billion in annual interest payments in just 3 years — and this is just interest, not even principal repayment. In 2017 under Najib, the total annual debt servicing cost was only RM28 billion.

Bottom Line: Is Madani Squeezing the Rakyat to Cover Their Own Failures?

To preserve their budget targets, slow the debt spiral, and fund ballooning interest payments, the Madani government will continue extracting from the rakyat — through every possible means — to cover up three years of economic mismanagement. When you don’t know how to run a country, everyone else will pay the price. 

As a responsible Government, one would present a reduction in operating expenditure and arrest leakages. Then only attempt to introduce less controversial taxes. But no, they insist on induced inflation especially with tariffs still not sorted. Why can’t you do the Tobin tax (for banks), widen the excess profit tax and increase the “sugar” tax?