KUALA LUMPUR – The government expects federal revenue to rise to RM380.8 billion in 2027 as it plans RM510 billion in expenditure and investments under Budget 2027.
Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim said the total allocation would increase from RM470 billion previously, as the government continues its expansionary fiscal policy while working towards reducing the fiscal deficit.
The RM510 billion package comprises RM376.8 billion in federal operating expenditure and RM83 billion in federal development spending.
The remaining RM50.2 billion will come from investments by government-linked investment companies (GLICs), public-private partnerships (PPPs), federal statutory bodies and companies owned by the Minister of Finance (Incorporated) (MOF Inc).
GLICs are expected to contribute RM25 billion, while PPP investments will account for RM11 billion. Federal statutory bodies and MOF Inc companies will provide the remaining RM14.2 billion.
Revenue expected to increase
According to Anwar, federal revenue is projected to reach RM363.6 billion this year, exceeding the initial estimate of RM343.1 billion.
The government expects collections to increase further to RM380.8 billion in 2027.
The higher revenue projection comes as the government seeks to meet its spending commitments while reducing the fiscal deficit over the coming years.
Fuel subsidies push deficit above target
The ongoing crisis in West Asia has increased pressure on government finances, with fuel subsidy spending reaching RM40 billion, Anwar noted.
As a result, the government has revised its 2026 fiscal deficit projection to 3.6% of gross domestic product (GDP), slightly above its original target of 3.5%.
Despite the revision, Anwar said the deficit remained on a downward trajectory, having declined from 5.5% of GDP in 2022 to 3.7% last year.
The government aims to reduce the deficit to 3.3% of GDP in 2027, before bringing it down further to 3% by 2028.
Government debt projected to decline
The government expects its debt-to-GDP ratio to fall from 65.2% in 2025 to 64% this year and 63.7% in 2027.
The projected decline is supported by a lower fiscal deficit and tighter controls on new borrowing.
Eight priorities guide Budget 2027
Anwar tabled the Supply (Budget) Bill 2027 in the Dewan Rakyat today, presenting the fifth MADANI Budget since the government was formed in 2022.
The budget outlines eight priorities guiding the country’s economic and development direction.
These include improving people’s well-being through better wages, family savings and opportunities to escape hardship, alongside developing high-value industries such as semiconductors, artificial intelligence, new energy and the digital economy.
The government also aims to ensure fairer access to education, healthcare, employment and economic opportunities, regardless of family background, region or status.
Strengthening local enterprises, particularly small businesses, is another priority, alongside responsible fiscal reform and better-targeted subsidies to ensure assistance reaches those in need.
The remaining priorities focus on governance and integrity, including efforts to combat corruption and leakages, as well as strengthening national resilience through food and supply security and developing the knowledge, skills and creativity of younger generations. – October 9, 2026