KUALA LUMPUR (Sept 22): Malaysia will keep spending on development in 2027 even as higher oil prices add pressure to the government’s subsidy bill.
While the government is committed to development, the Ministry of Finance will manage the fiscal impact, Economy Minister Akmal Nasrullah Mohd Nasir said.told reporters after the ministry’s monthly assembly on Tuesday.
“Although managing oil prices is an urgent short-term matter, the long-term commitment must remain,” he said.
Akmal Nasrullah was responding to concerns over the impact of higher oil prices on Budget 2027, including the government’s ability to manage subsidies and the rising cost of living. The government earmarked RM81 billion for development in 2026 out of total budget of RM419 billion.
Brent, the global benchmark for crude oil, has remained above US$100 per barrel. While Malaysia is a net oil and gas exporter, higher prices will drag on government finances due to an increase in subsidies for fuel to shield consumers from the price spike.
Akmal said the Ministry of Finance is monitoring the issue and balancing the need to cushion households against supply disruptions with fiscal considerations.
The extent of the fiscal impact remains uncertain given continued volatility in global oil prices, he noted.
Still, there is room for the government to manage the burden on households from higher global oil prices, while keeping development plans under the Economy Ministry on track, he added.