Brunei Darussalam is projected to have the lowest government debt ratio among Southeast Asia’s 11 countries in 2026.
The International Monetary Fund’s (IMF) World Economic Outlook, as compiled by the regional data platform ASEAN in Data, projects Brunei’s gross government debt at 1.5% of gross domestic product (GDP) in 2026. Its neighbours sit much higher. Indonesia is projected at 41.5%, Malaysia at 69.5% and Singapore at 171.9%.
The ratio sets a government’s total debt against the value of everything its economy produces in a year. A smaller figure means the debt is small relative to the economy, but it does not by itself show that a government’s finances are in good shape.
A household offers a simple comparison. Take a family that earns $100 a year. If it owes $1.50, the debt is minor next to its income. If it owes $171.90, the debt is well above what it earns in a year. The comparison is not exact, but it shows how debt is judged against income, whether for a family or for a national economy.
Brunei’s low ratio is only one side of its finances. The country is also projected to record a fiscal deficit in 2026, which means the government expects to spend more than it takes in. This leaves two questions.
How has Brunei kept its debt so low, and does a low debt ratio mean its public finances are secure?
The Role of Hydrocarbons
Oil and natural gas help explain why Brunei has maintained such a low government debt ratio. The energy sector has long played a central role in the country’s economy, generating export earnings and government revenue.
According to the International Monetary Fund’s (IMF) Brunei Darussalam: 2026 Article IV Consultation report, oil and gas revenue accounted for 9.3% of GDP in FY2025/26. This revenue helps fund government spending, reducing the need to rely entirely on borrowing.
However, this dependence also exposes Brunei’s public finances to fluctuations in global energy prices and oil and gas production. When prices fall or production declines, government revenue can weaken, making it harder to cover public expenditure without drawing on financial reserves or other sources of funding.
Brunei’s 2025 fiscal results illustrate this challenge. According to Brunei Key Economic Developments: Q4 & Annual 2025, published by the Department of Planning and the Department of Economic Planning and Statistics, the government recorded a fiscal deficit of BND3.09 billion (roughly US$2.41 billion) in 2025.
The report attributed the deficit mainly to lower government revenue, particularly from oil and gas amid weaker crude oil prices, alongside continued government expenditure.
Low Debt and the Fiscal Deficit
A government can have little debt and still spend more than it collects in revenue. Public debt refers to the total amount a government owes, while a fiscal deficit occurs when expenditure exceeds revenue over a given period. In simple terms, debt is what a family owes a bank, while a deficit occurs when it spends more than it earns in a year.
Brunei’s fiscal deficit widened to an estimated 18.9% of GDP in the 2025/2026 financial year. The shortfall was financed by drawing on existing fiscal reserves rather than relying solely on new borrowing. This helps explain how Brunei can maintain a low government debt ratio despite running a substantial deficit.
Fiscal reserves function much like a government savings fund. Using them allows the government to cover spending without taking on additional debt, but it also reduces the resources available for future needs.
If deficits persist without a more sustainable balance between revenue and expenditure, these financial buffers may gradually diminish, leaving the government with less room to respond to future economic shocks.
Sustaining the Position
How long Brunei can keep its debt ratio low is tied closely to its dependence on oil and natural gas, since the country’s revenue still rises and falls with energy markets.
Through Brunei Vision 2035, its long-term development plan, the government has made diversification a national priority. Official initiatives target tourism, food production, information and communications technology, services and downstream oil and gas industries.
Growth in these areas could broaden the economy’s sources of income and potentially strengthen government revenue, while making the country less exposed to fluctuations in global energy prices.
Brunei’s projected debt ratio of 1.5% of GDP in 2026 means it owes very little relative to its economy. The fiscal deficit, however, shows the government is spending more than it collects. Over the long run, its finances will depend on controlling spending, strengthening revenue and keeping enough reserves for years when oil and gas income is weak.
