KUALA LUMPUR: The federal government has approved loans totalling RM24.15 billion to state governments as of August 31, 2025.
The Ministry of Finance stated in a parliamentary written reply that these loans are categorised into four specific areas.
These categories include Low-Cost Public Housing, water supply, State Economic Development Corporations, and miscellaneous projects.
Water supply projects represent the largest portion of the approved loans at 58.12%.
Miscellaneous projects account for 27.61% of the total loans while Low-Cost Public Housing receives 7.84%. State Economic Development Corporations obtain the smallest share at 6.43% of the approved loan amount.
The ministry emphasised that loan disbursement follows an orderly process to prevent state debt from burdening the national fiscal position.
“To ensure that state government debt does not place a burden on the national fiscal position, the disbursement of these loans must go through an orderly and thorough process, including reasonable loan terms and interest rates imposed on the borrowers, taking into account the federal government’s cost of funds,” the ministry explained.
All loans undergo due diligence assessing financial and non-financial covenants alongside the borrowers’ repayment capacity.
In response to separate parliamentary questions, the ministry detailed Budget 2025 allocations across Malaysian states.
The Southern Region receives RM4.8 billion for development expenditure and RM9.6 billion for operating expenditure.
The Northern Region obtains RM7.2 billion for development and RM22.6 billion for operating expenditure.
The Eastern Region is allocated RM8.4 billion for development and RM19.7 billion for operating expenditure.
The Central Region receives the largest development allocation at RM24.1 billion alongside RM17.1 billion for operating expenditure.
Sabah is allocated RM6.7 billion for development and RM10.6 billion for operating expenditure.
Sarawak receives RM5.9 billion for development expenditure and RM8.9 billion for operating expenditure.
Regarding infrastructure development in Sabah, the ministry confirmed a review of the Trans-Sabah Gas Pipeline project direction and implementation.
The government is exploring medium and long-term initiatives to ensure electricity supply security in Sabah’s East Coast region.
“This includes the development of a Battery Energy Storage System in Lahad Datu, Sabah, with a capacity of 100 megawatts/400 MWh, aimed at stabilising electricity supply to the East Coast grid covering the Sandakan–Lahad Datu–Tawau corridor,” the ministry added. – Bernama