This article first appeared in The Edge Malaysia Weekly on October 12, 2026 - October 18, 2026

BUDGET 2027 continues to balance fiscal consolidation with support for lower- and middle-income households. Measures announced under the budget include additional tax relief and a higher RM16 billion allocation for Sumbangan Tunai Rahmah and Sumbangan Asas Rahmah assistance.

The government is also targeting a narrower fiscal deficit of 3.3% of gross domestic product in 2027, from a revised 3.6% in 2026. This comes despite continued pressure from elevated fuel subsidies and rising operating expenditure (opex). Federal revenue is projected to rise to RM380.8 billion, supported by higher tax collections, particularly from the sales and service tax (SST) as well as an increase in petroleum-related revenue.

Much of the government’s spending continues to be dominated by opex, particularly emoluments, retirement charges and debt servicing. Development expenditure (devex), meanwhile, is projected to rise marginally to RM83 billion from RM81 billion in 2026. This reflects the government’s continued emphasis on improving fiscal discipline and more selective spending across sectors.

The charts and tables illustrate the key trends that shape Malaysia’s latest federal budget. 

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