Malaysia targets 3.3pc fiscal deficit in 2027, 3pc by 2028, says Treasury sec-gen

KUALA LUMPUR, Oct 12 — Malaysia aims to reduce its fiscal deficit to 3.3% next year and further down to 3% by 2028, according to Treasury Secretary-General Tan Sri Johan Mahmood Merican. Speaking at a panel discussion on "Post-Budget 2027 Debate," Johan emphasized that fiscal consolidation is a top priority for the government, aimed at preserving investor confidence.

"This is an area where the government is placing strong emphasis on. This is so Malaysia can demonstrate our ability to execute disciplined and prudent financial management," Johan stated.

The government's fiscal deficit is projected to be 3.6% this year, after decreasing from 5.5% in 2022 to 3.7% in 2025. Johan acknowledged that factors such as uncertainty in the Middle East and the potential for higher oil prices have been considered in the government's planning for next year. This year's subsidy allocation of approximately RM40 billion is expected to remain unchanged into 2027.

However, adjustments will be made as needed, similar to the response taken this year when oil prices increased more than anticipated. The government's fiscal consolidation efforts are regulated by the Public Finance and Fiscal Responsibility Act 2023, which outlines a framework for responsible management of public finances.