KUALA LUMPUR – The government will continue its expansionary fiscal policy under Budget 2027, with total expenditure and investments projected to increase to RM510 billion from RM470 billion previously.
Prime Minister Datuk Seri Anwar Ibrahim said the allocation comprises RM376.8 billion in federal operating expenditure and RM83 billion for federal development spending.
The remaining RM50.2 billion will come from investments by government-linked investment companies (GLICs), public-private partnerships, federal statutory bodies and companies owned by the Minister of Finance (Incorporated).
This includes RM25 billion in GLIC investments, RM11 billion in public-private partnership investments and RM14.2 billion from federal statutory bodies and MOF Inc companies.
Federal revenue is projected to reach RM363.6 billion this year, exceeding the initial estimate of RM343.1 billion. Revenue is expected to rise further to RM380.8 billion in 2027.
However, the ongoing West Asia crisis has pushed fuel subsidy spending to RM40 billion, prompting the government to revise its 2026 fiscal deficit projection to 3.6% of gross domestic product (GDP), slightly above the original target of 3.5%.
Despite the revision, Anwar said the deficit remained on a downward trajectory, having fallen from 5.5% in 2022 to 3.7% last year.
The government aims to reduce the fiscal deficit further to 3.3% in 2027, with the longer-term goal of bringing it down to 3% by 2028.
The government’s debt-to-GDP ratio is also expected to decline gradually, from 65.2% in 2025 to 64% this year and 63.7% in 2027, supported by a lower fiscal deficit and tighter control over new borrowing. – October 9, 2026