THE Rural and Regional Development Ministry (KKDW) has consistently spent beyond its approved allocations for rural road projects, with the excess reaching hundreds of millions of ringgit annually and prompting the Finance Ministry (MOF) to step in to address outstanding payments to contractors.
Treasury secretary-general Tan Sri Johan Mahmood Merican said KKDW had made commitments and incurred expenditure exceeding its annual allocations for rural road projects since 2022.
He said the situation was not due to any restriction imposed on the ministry’s rural road allocation, which had been fully channelled.
Instead, payment constraints arose because much of KKDW’s allocation for the current financial year had already been committed and spent.
“Every ministry is responsible for planning and managing its expenditure based on the annual Budget allocation approved by Parliament.
“No restrictions have been imposed on the allocation for rural roads under the Ministry of Rural and Regional Development. The allocation has been fully channelled.
“The constraints in the payment process to contractors have arisen because the current year’s allocation has already been almost fully spent,” he said in a statement on Wednesday.
Official figures show KKDW’s actual expenditure exceeded its approved allocation in 2023, 2024 and 2025, after matching its RM1.1 billion allocation in 2022.
The ministry spent RM1.8 billion in 2023 against an approved allocation of RM1.1 billion, exceeding it by RM700 million.
In 2024, expenditure reached RM2 billion against RM1.3 billion approved, a RM700 million gap.
The disparity widened in 2025, when KKDW spent RM2.3 billion despite an approved allocation of RM1.6 billion, exceeding it by RM700 million.
For 2026, KKDW was allocated RM2.1 billion and had spent RM1.9 billion as of June.
Johan said MoF was working with KKDW to resolve the payment issue, including by restructuring the ministry’s allocations according to priority.
“To date, for 2026, the Ministry of Finance has approved an additional allocation of RM300 million to help resolve outstanding payments to contractors,” he said.
MoF is also in the process of identifying savings from other ministries to help cover KKDW’s excess commitments, he added.
The government’s clarification follows concerns over delays in payments to contractors involved in rural road projects.
MoF stressed that the issue was not caused by any restriction on KKDW’s approved rural road allocation, but by the ministry having committed and spent beyond its annual provision in previous years. - September 2, 2026
