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5h ago

Malaysia Tables Record RM419.2 Billion Budget, Sets 3.5% Deficit Target

Parliament starts debate next week on a plan targeting a 3.5% deficit through tighter subsidies, better tax collection.

Malaysia's Prime Minister Anwar Ibrahim speaks in Kuala Lumpur, Malaysia, October 6, 2025. REUTERS/Hasnoor Hussain/Pool/File Photo
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Overview

  • Operating spending is set at RM338.2 billion with RM81 billion for development, lifting total outlays 1.7% from the revised 2025 figure.
  • Revenue is projected to rise 2.7% to RM343.1 billion, driven by higher direct and indirect tax collections supported by a full-year e‑invoicing rollout.
  • Spending on subsidies and social assistance will drop 14.1% to RM49 billion, reflecting lower commodity prices and a shift to more targeted aid.
  • Petronas is forecast to pay a RM20 billion dividend in 2026, down from RM32 billion this year and the lowest since 2017, pulling non-tax revenue lower.
  • The government forecasts 4%–4.5% growth in 2026 and flags U.S. tariffs of 19% on Malaysian exports as a key risk, with policy debate beginning Oct 13.