Prime Minister Dato Seri Anwar Ibrahim has announced an RM459.8 billion in federal government expenditure for Budget 2027, substantially above the original allocation approved for 2026.
Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim, tabling Budget 2027 in Parliament today, set aside RM376.8 billion for operating expenditure and RM83 billion for development expenditure.
The RM459.8 billion allocation is RM38.6 billion, or about 9.2%, higher than the RM421.2 billion federal expenditure originally estimated for Budget 2026, which comprised RM338.2 billion in operating expenditure and RM83 billion in development spending.
Against the government’s revised 2026 expenditure of RM444.1 billion, however, Budget 2027 represents an increase of about RM15.7 billion, or 3.6%.
Petroliam Nasional Bhd (Petronas) is expected to contribute RM32 billion in dividends to the government next year, compared with a revised RM27 billion in 2026.
The government expects Malaysia’s economy to expand between 4.2% and 5.2% in 2027, supported by domestic demand, while headline inflation is forecast at between 1.8% and 2.8%.
Anwar said the larger spending programme does not represent a retreat from fiscal consolidation, with the government maintaining its medium-term commitment to strengthening public finances while retaining the flexibility to respond to economic pressures.
The higher Budget comes as Malaysia faces elevated energy costs and a heavier subsidy burden. Subsidies and social assistance are estimated to reach RM74.5 billion in 2026, before easing slightly to RM72.7 billion next year.
The RM459.8 billion figure refers specifically to federal operating and development expenditure. This differs from the broader RM470 billion public expenditure figure cited for 2026, which also incorporated catalytic investments by government-linked investment companies, government-linked companies and other public entities.
Budget 2027 therefore represents a sizeable increase in direct federal spending from the amount originally approved for 2026, while retaining the same RM83 billion development expenditure allocation and directing most of the increase towards operating expenditure.
