Budget 2027 estimated at RM459.8b, up 3.6pc year-on-year, says MOF

The Federal Government has estimated the Budget for 2027 to be RM459.8 billion, marking a 3.6 per cent increase from the revised 2026 allocation. This figure represents 19.8 per cent of the country's gross domestic product (GDP). The Ministry of Finance (MoF) revealed that the government revised the 2026 budget from RM441.1 billion to RM459.8 billion, taking into account adjustments in spending priorities and fiscal requirements throughout the year.

In their latest Fiscal Outlook and Federal Government Revenue Estimates 2027 report, the ministry outlined that RM376.8 billion, or 81.9 per cent of the 2027 budget, will be allocated towards operating expenses (OE). The remaining RM83 billion will be directed towards development expenditure (DE). The government continues to prioritize rakyat-centric projects and programmes, with 30.2 per cent of the total allocation, approximately RM138.0 billion, directed towards the Ministry of Education, Ministry of Health, and Ministry of Defence.

Operating expenses, consisting of social, economic, security, and general administration sectors, will receive a combined RM226.0 billion, representing 16.2 per cent of the GDP. The social sector, prioritizing human capital development and public welfare, will receive the largest share at RM161.6 billion, or 35.1 per cent of total expenditure.

This is followed by the economic sector with RM59.4 billion (12.9 per cent), the security sector with RM46 billion (10 per cent), and general administration with RM23.4 billion (5.1 per cent). The remaining RM169.4 billion comprises charged expenditures and transfer payments. Operating expenses represent 16.2 per cent of GDP, an increase of 3.8 per cent from the revised 2026 budget.

This rise is attributed to higher allocations for emoluments, retirement charges, debt service charges (DSC), and supplies and services. Emolument, accounting for 29.6 per cent or RM111.6 billion of OE, is projected to grow by 2.9 per cent, reflecting annual salary increments. Subsidies and social assistance are budgeted to decline by 2.3 per cent to RM72.7 billion, which accounts for 19.3 per cent of total OE.

Debt servicing charges (DSC) are projected to increase by 6.5 per cent to RM61 billion, representing 16.2 per cent of OE. For development expenditure (DE), the government has allocated RM83 billion for 2027, including funds for about 1,500 new approved programs and projects. Economic sector, which includes strategic infrastructure expansion and investment promotion, will receive the largest share at RM37.7 billion, or 45.4 per cent of DE.

The social, health, housing, security, and general subsectors will receive RM3.2 billion, accounting for the remaining 3.6 per cent of DE. State governments will be the largest recipients of loans from DE, with RM503 million in allocations, followed by companies (RM463 million), federal statutory bodies (RM58 million), and other organisations and cooperatives (RM2 million).

Loan repayments are projected at RM1.5 billion, with companies expected to repay the highest amount at RM955 million, followed by state governments (RM419 million) and federal statutory bodies (RM120 million).