Revenue to rise to RM380.8 billion and debt to ease to 63.7 per cent of GDP, though the West Asia fuel shock pushed this year’s deficit above target
| IN BRIEF: Total resources of RM510 billion, up from RM470 billion. Deficit: 3.6 per cent in 2026 (target 3.5), 3.3 per cent in 2027, 3 per cent by 2028 Federal debt to ease to 63.7 per cent of GDP. GDP growth forecast at 4.2 to 5.2 per cent in 2027 |
By TENGKU NOOR SHAMSIAH TENGKU ABDULLAH
KUALA LUMPUR, Oct 9 – The government will narrow the fiscal deficit to 3.3 per cent of gross domestic product (GDP) in 2027 even as it expands total budget resources to RM510 billion, Prime Minister Datuk Seri Anwar Ibrahim said when tabling Budget 2027 today.
Anwar, who is also Finance Minister, described the Fifth MADANI Budget as continuing an expansionary fiscal policy, with resources up from RM470 billion this year.
“Fighting corruption and leakages, managing the deficit responsibly and strengthening the structure of our economy are not optional extras in the business of government,” he told the Dewan Rakyat.
WHERE THE RM510 BILLION COMES FROM
The total comprises RM376.8 billion in federal operating expenditure, RM83 billion in federal development expenditure, RM25 billion in GLIC investments, RM11 billion in public-private investments and RM14.2 billion in investments by federal statutory bodies and Minister of Finance Incorporated (MKD) companies. Federal operating and development spending together come to RM459.8 billion.
Federal revenue this year is now projected at RM363.6 billion, above the original estimate of RM343.1 billion, and is expected to rise to RM380.8 billion in 2027.
WEST ASIA SHOCK
Anwar acknowledged that the crisis in West Asia had raised fuel subsidies to RM40 billion, pushing the 2026 deficit to a projected 3.6 per cent, above the original target of 3.5 per cent.
He said the deficit nonetheless remained on a downward trajectory from 5.5 per cent in 2022 and 3.7 per cent last year, and is expected to fall to 3.3 per cent in 2027, towards the target of 3 per cent by 2028.
Federal government debt is projected to decline from 65.2 per cent of GDP in 2025 to 64.0 per cent this year and 63.7 per cent in 2027.
GROWTH OUTLOOK
Second-quarter GDP grew 6 per cent, exceeding the expectations of government agencies, and growth for 2026 is projected at 4.8 to 5.3 per cent. For 2027, the government forecasts growth of 4.2 to 5.2 per cent.
“Although global uncertainty is expected to persist, Malaysia’s economic fundamentals remain strong,” Anwar said.
Approved investments reached RM218.5 billion in the first half of 2026, up 11.7 per cent, putting Malaysia on track for a record for the third consecutive year. Trade in the first eight months reached RM2.5 trillion, with exports up 31.2 per cent to RM1.36 trillion.
GUARDING THE PURSE
On governance, a Government-Owned Entities Bill will be drafted to cover government companies and statutory bodies, with the aim of preventing a recurrence of abuses such as the 1MDB scandal and the Tabung Haji and FELDA crises. Once the Government Procurement Act comes into force in 2027, project information, including contractors and contract values, will be publicly disclosed.
Enforcement agencies including the Malaysian Anti-Corruption Commission, the police, the Domestic Trade and Cost of Living Ministry, Customs and the Malaysia Competition Commission will receive RM1.1 billion to strengthen their operations.
“An economy cannot stand strong on weak institutions,” Anwar said.
- TNS NEWS