Government subsidy expenditure fell 40.1% to RM23.43 billion in 2025, driven by lower oil prices and targeted diesel and petrol subsidy reforms
KUALA LUMPUR: The government has managed to reduce its subsidy expenditure by 40.1 per cent to RM23.43 billion in 2025 from RM39.10 billion in 2024, supported by the decline in crude oil prices and the implementation of the targeted diesel and petrol subsidy reforms.
According to the Auditor General’s Report (LKAN) 2/2026 on the Federal Government’s Financial Statements for 2025, the RM15.67 billion reduction was partly attributable to a significant decrease in petroleum product subsidy, from RM34.91 billion in 2024 to RM19.11 billion in 2025.
“The reduction in subsidy expenditure was partly due to the decline in global crude oil prices and initiatives to reform targeted diesel subsidies from June 2024 and petrol subsidies from September 2025,” the report said.
It said the average global crude oil price fell to US$69.05 per barrel in 2025 from US$80.81 per barrel in 2024.
Petrol subsidy expenditure fell 46.5 per cent year-on-year (y-o-y) to RM10.51 billion from RM19.66 billion in 2024, while diesel subsidy expenditure declined 48.2 per cent y-o-y to RM5.98 billion from RM11.54 billion previously.
Meanwhile, liquefied petroleum gas (LPG) subsidy expenditure decreased 29.1 per cent y-o-y to RM2.63 billion from RM3.71 billion previously.
At the same time, expenditure on welfare grants and assistance for communities, individuals and families increased 380.8 per cent to RM20.36 billion in 2025 from RM4.24 billion in 2024.
“The increase in expenditure was partly due to the disbursement of Sumbangan Asas Rahmah (SARA), Sumbangan Tunai Rahmah (STR), the MADANI Subsidy Assistance Programme (BUDI MADANI) and STR operating costs,” the report said.
