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THE Government is expected to table an expansionary Budget 2026 this Friday, with a projected fiscal deficit of around 3.6 per cent of GDP — slightly lower than the estimated 3.8 per cent for 2025.
According to Bank Muamalat Malaysia Bhd Chief Economist Dr Mohd Afzanizam Abdul Rashid the government is likely to maintain a cautious fiscal stance, prioritising key public service sectors such as education, healthcare and essential infrastructure, rather than launching new large-scale mega projects.
“In line with the government’s prudent fiscal position and its decision not to undertake new mega-scale developments — a wise move given the current economic landscape — greater emphasis is expected on people-centric initiatives,” he told Bernama.
These initiatives are likely to include improvements to basic infrastructure such as road upgrades, flood mitigation, irrigation systems, and the construction or refurbishment of schools and hospitals, all of which have a more immediate and tangible impact on public welfare, he said.
Dr Mohd Afzanizam also noted that the fiscal deficit for the first half of 2025 had already narrowed to RM40.5 billion or 4.2 per cent of GDP, compared to RM51.6 billion (5.5 per cent) in the same period last year.
He added that early signs indicate the government is on track to further reduce the deficit gradually, supported by ongoing fiscal consolidation measures.
“With the implementation of ongoing consolidation steps — including the introduction of new taxes, expansion of the Sales and Services Tax (SST), the rollout of e-invoicing, and subsidy rationalisation — the government is expected to steadily reduce the fiscal deficit,” he said.
Prime Minister Datuk Seri Anwar Ibrahim, who also serves as Finance Minister, is scheduled to present Budget 2026 in Parliament on 10 October. - October 8, 2025
