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

KUALA LUMPUR, Oct 12 — Malaysia is aiming for a fiscal deficit of 3.3 percent in the coming year, with a target of reducing it to 3 percent by 2028, according to Treasury Secretary-General Tan Sri Johan Mahmood Merican. Addressing a panel discussion titled "Post-Budget 2027 Debate" organized by the Malaysian Economic Association in Kuala Lumpur, Johan emphasized that fiscal consolidation remains a top priority for the government, crucial for maintaining investor confidence.

He stressed the importance of disciplined and prudent financial management in demonstrating Malaysia's capability to achieve this goal. Johan reiterated the government's commitment to the pledges made under the Fiscal Responsibility Act, aiming to bring the fiscal deficit down to as low as three percent by 2028. This year, the government is targeting a fiscal deficit of 3.6 percent, down from 5.5 percent in 2022 to 3.7 percent in 2025.

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. The subsidy allocation of around RM40 billion is expected to continue into the following year, although adjustments will be made as necessary, similar to the response to unexpected increases in oil prices.

The government's fiscal consolidation efforts are guided by the Public Finance and Fiscal Responsibility Act 2023, which serves as a framework for responsible management of public finances.