KUALA LUMPUR, Oct 11 — Budget 2026 signals Malaysia’s shift from populist policies towards fiscal discipline and transparency, the Center for Market Education (CME) said today.
The think tank said the RM470 billion national budget, tabled by Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim yesterday, deserves praise for introducing targeted subsidies and other reform measures.
While tabling the Budget, Anwar said the move to targeted subsidies is expected to save the country about RM15.5 billion a year, with RON95 fuel subsidy targeting alone projected to save at least RM2.5 billion.
He added that the government is updating the database for the Budi95 scheme to provide additional quotas to 23,000 registered boat owners and more than 52,000 active e-hailing drivers.
“Reforms such as the Budi95 fuel scheme and diesel-subsidy rationalisation are less distortionary than universal subsidies, which historically fuel overconsumption and rent-seeking (behaviour).
“The narrower targeting at least limits moral hazard and waste,” CME said in a statement.
CME also lauded the government’s plan to narrow the fiscal deficit from 4.1 per cent to 3.5 per cent, with a medium-term target of three per cent, calling it a responsible step.
Reducing the fiscal deficit means cutting the gap between government spending and revenue, which would in turn reduce the need for new borrowing.
Anwar previously said annual government debt has declined from RM100 billion in 2022 to RM77 billion in 2024.
However, CME urged the government to introduce institutional rules and constitutional caps to deter any future fiscal backsliding.
The think tank also welcomed plans to mobilise around RM10 billion through public-private partnerships and co-investment with government-linked investment companies, alongside higher allocations for Sabah and Sarawak and expanded digital connectivity in both states.
Under Budget 2026, Sabah and Sarawak received the highest federal allocations for development, at RM6.9 billion and RM6 billion respectively.
In addition to RM48 billion worth of infrastructure projects for both states, the government has earmarked RM2 billion for the Madani Submarine Cable System (Salam) to enhance digital links for peninsular Malaysia, Sarawak and Sabah.
“If properly implemented, these measures may permit freer economic activity in previously under-served regions,” CME said.
