Prime Minister Datuk Seri Anwar Ibrahim has indicated that Malaysia may see reduced budget allocations for ministries in 2027 as the government moves to manage economic pressures linked to ongoing geopolitical tensions in the Middle East.
He said the conflict has affected regional stability and had spillover effects on Malaysia’s economy, although the country continues to record encouraging performance in the first quarter of the year, which he described as among the better performers in Asean and Asia.
Anwar, who is also Finance Minister, stressed that while fiscal adjustments may be necessary, priority areas such as education quality and basic infrastructure in schools and universities will remain protected and unaffected.
General economic policy adjustments of this nature are typically introduced to ensure government spending remains sustainable while maintaining essential public services during periods of global uncertainty.
Speaking at the launch of the Kuala Lumpur International Book Fair, he said ministries must recognise the need for spending cuts and explore areas where expenditure can be reduced, noting that it is not feasible for all allocations to remain unchanged.
He also highlighted that out of the RM20 billion allocation, there are multiple areas where efficiency measures and cost reductions can be implemented without affecting core services.
Anwar said all ministries, including the Education Ministry and Higher Education Ministry, have been instructed to review their spending and identify opportunities for optimisation.
He added that government agencies must avoid working in silos and instead adopt a broader perspective on Malaysia’s macroeconomic challenges.
Earlier, the Finance Ministry had directed all ministries and agencies to review operational expenditure to streamline programmes amid global supply constraints, with an emphasis on moderation in official events and large-scale initiatives.
However, the ministry clarified that the cost rationalisation exercise will not affect frontline services, healthcare, security or education, with only non-essential spending being adjusted.
