PUTRAJAYA (BLOOMBERG, BERNAMA) - Malaysia is tapping public euphoria to raise funds and reduce the country's RM1 trillion (S$337 billion) debt burden, after a shock election victory this month toppled the previous government.

The finance ministry set up Tabung Harapan, or the Hope Fund, for citizens who were eager to contribute after the government said Malaysia's debt was higher than previously disclosed by the previous administration.

Announcing the fund on Wednesday (May 30), Prime Minister Mahathir Mohamad said it was necessary to ensure that the donations from patriotic Malaysians would reach the Ministry of Finance.

"Many Malaysians, after knowing the bad state of the country s financial position, are willing to make donations to the government," Tun Dr Mahathir said at a press conference after chairing a meeting of the Cabinet.

"We welcome their patriotic attitude and express our gratitude to them," he added.

Dr Mahathir has scrapped multibillion-dollar projects, cut ministerial salaries and dismissed thousands of contract workers to shore up the budget.

"There are signs of awareness from the people to lend their support to the government," Finance Minister Lim Guan Eng said in a press statement on Wednesday.

"The people voluntarily want to share their earnings with the government to help ease the burden."

Former prime minister Najib Razak was ousted in an election on May 9 that ended his party's six-decade rule amid allegations of corruption and discontent over rising living costs.

Malaysians would not be the first to pool their money to support the state budget, with Thais and South Koreans having done so during the Asian financial crisis in 1998, when housewives and men queued up to donate their wealth.

Lawmakers in Malaysia had earlier told the people to hold off from contributing money to any unauthorised campaigns until they hear from the Cabinet.

The recent announcement of the national debt of RM1 trillion had prompted many Malaysians to express over the social media their readiness to make donations to help the government reduce the debt.