Malaysia's 2026 Budget: Striking a Balance Amid Economic Challenges

Malaysia's forthcoming 2026 budget is expected to increase public subsidies and social assistance amidst rising living costs. The government aims to strengthen its fiscal position without major new taxes, though excise duties may rise. A focus on fiscal consolidation and revenue growth is anticipated amidst economic uncertainties.

Malaysia is poised to increase public subsidies and social assistance within its 2026 budget in response to escalating living costs, according to economists. While the government is keen on boosting revenue and reinforcing its fiscal stance, it is not expected to introduce broad-based taxes, though excise duties on alcohol and tobacco may increase.

Prime Minister Anwar Ibrahim, also serving as finance minister, plans to reveal the spending framework on Friday, aligning it with a five-year strategy announced in July. Efforts to consolidate the fiscal base have been ongoing, with significant reforms over recent years coming into play, according to CGS International economists.

The upcoming budget will emphasize social protections and key sectoral investments, despite a potential slowdown in government revenue growth in 2026. Analysts forecast that the fiscal deficit could narrow in the next fiscal year, with a calculated focus on strategic economic reforms.

(With inputs from agencies.)