Premier: Sarawak’s 2025 deficit driven by global challenges, not policy failures

KUCHING (Dec 3): Sarawak’s lower revenue projection for 2025 was driven entirely by global economic challenges, particularly weak crude oil prices, and not because of any shortcomings in state policies or financial management, said Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg.

He said the budget deficit for 2025 posed no threat to the state’s financial position, and cited robust reserves, strict fiscal discipline, and the strategic use of alternative funding to accelerate development without draining cash resources.

“Sarawak’s financial governance continues to meet the highest international standards.

“Sarawak has consistently received clean certificates from the Auditor General, while Moody’s (A3, Stable), S&P Global Ratings (A-, Stable), and Rating Agency Malaysia (AAA) have reaffirmed the state’s strong credit standing.

“These independent assessments are impartial and evidence-based. They are clear testimonies to our robust financial health and the responsible way we manage every Ringgit,” he told the august House yesterday.

Abang Johari said like other oil-producing economies, Sarawak was affected by global volatility and geopolitical uncertainties but despite this, the state has set aside a RM2.2 billion buffer in the Development Fund Account, equivalent to the size of the deficit, ensuring development plans proceed as scheduled.

“This shows our responsible and professional forecast in crafting our yearly budget,” he said.

Taking aim at criticism from the opposition, Abang Johari said alternative funding was fully transparent, properly accounted for, and approved annually by the State Legislative Assembly (DUN).

He said claims that the state’s deficit figures did not include spending under the initiative were “factually incorrect” and misleading.

“The servicing of financial obligations under alternative funding is fully budgeted every year in the State’s development expenditure. To claim otherwise casts unwarranted doubt on a process that is subject to full legislative oversight,” he said.

The Premier explained the mechanism using the analogy of a family taking a hire-purchase loan for a car so they can run a business.

“Instead of emptying their savings to buy the car outright, they use it to earn income and pay the instalments. ‘Pakai kereta cari duit’ (use the car to look for money), not ‘habiskan duit untuk beli kereta’ (use up the money to buy the car),” he said.

Alternative funding, sourced solely from the Development Bank of Sarawak (DBOS), allowed the state to fast-track high-impact infrastructure while preserving reserves and beating long-term cost inflation, he added.

Among the projects supported through this mechanism are the coastal road network, the second trunk road, 14 major bridges, water supply grid, digital infrastructure and the Autonomous Rapid Transit (ART) system — all contributing to the construction sector’s 18.7 per cent growth last year.

Abang Johari also dismissed allegations of bypassing statutory budgeting processes as “entirely baseless and made in bad faith.”

He said the government would continue providing regular updates on physical and financial progress, with strict compliance to reporting requirements.

“If still in doubt, I would encourage the relevant YBs to equip themselves with basic banking and finance knowledge,” he said.

Looking ahead, he said Sarawak will adopt the Integrated Results-Based Management (IRBM) framework starting with the 13th Malaysia Plan (13MP).

Under this system, all ministries and agencies must align planning, budgeting and performance reporting; including Projek Rakyat (People’s Project), Rural Transformation Programme (RTP) and Sarawak Poor Housing Improvement Programme (PPRMS) to ensure clear outcomes and measurable targets.

The Performance and Results Management Solution (PReMaS) will serve as the digital backbone, enabling real-time tracking and quicker decision-making.

“The 13MP will mark a new era of disciplined execution and sound governance for Sarawak,” he said.