THE Government has begun preparations for Budget 2027, with Prime Minister Datuk Seri Anwar Ibrahim saying the government has started drafting the country’s next national spending plan ahead of its tabling in Parliament in October.
“We are drafting it now. We have just started,” Anwar told reporters after attending the Humane Economy Global Discourse 2026 at the World Trade Centre Kuala Lumpur on Thursday.
The upcoming budget is expected to be a key policy test for the government as it seeks to balance economic growth, targeted assistance and fiscal consolidation amid rising expenditure commitments and external economic uncertainties.
Budget 2027 will follow Budget 2026, Malaysia’s largest-ever national budget allocation at RM470 billion, which focused on strengthening economic resilience, expanding social protection and supporting development priorities.
One of the major issues likely to shape the new budget is the government’s management of subsidies, particularly fuel subsidies, as global crude oil prices remain vulnerable to geopolitical tensions and supply disruptions.
Recent instability in the Middle East, including risks affecting major energy shipping routes such as the Strait of Hormuz and the Red Sea, has contributed to volatility in oil markets and raised concerns over higher government spending on fuel subsidies.
Higher crude prices could increase the cost of maintaining subsidised fuel prices, placing additional pressure on government finances as Putrajaya continues efforts to reduce wastage and improve the targeting of assistance.
The government has maintained that blanket subsidies are inefficient as they also benefit higher-income groups, and has been moving towards targeted subsidy mechanisms aimed at ensuring aid reaches eligible households.
The rollout of targeted diesel subsidies through the BUDI MADANI and Subsidised Diesel Control System (SKDS) programmes marked a major step in subsidy restructuring, while plans for a more targeted RON95 petrol subsidy remain among the key policy considerations ahead of Budget 2027.
However, subsidy reforms remain politically sensitive, with the government needing to balance fiscal responsibility against public concerns over rising household expenses, including food, transport and daily living costs.
Anwar has repeatedly stressed that economic reforms must be implemented carefully to protect vulnerable groups while improving the country’s long-term financial position.
Apart from subsidies, Budget 2027 is expected to focus on strengthening investment, creating higher-value employment opportunities, accelerating renewable energy development, improving infrastructure, expanding digital transformation and enhancing Malaysia’s competitiveness.
The government is also expected to continue efforts to reduce the fiscal deficit while maintaining support for economic growth and attracting quality domestic and foreign investments.
With Malaysia facing an increasingly uncertain global economic environment, the budget is likely to place emphasis on boosting productivity, increasing household incomes and ensuring sustainable development.
The tabling of Budget 2027 in October will mark the fourth national budget under the MADANI administration and is expected to outline the government’s economic priorities ahead of the next general election cycle. - July 23, 2026
