The Ministry of Finance (MoF) has denied imposing any restrictions on allocations for rural road projects under the Ministry of Rural and Regional Development (KKDW), saying the funds had been fully channelled.
Treasury secretary-general Tan Sri Johan Mahmood Merican said delays in payments to contractors were instead linked to the near-full utilisation of KKDW’s allocation for the current financial year.
“There has been no restriction imposed on the KKDW allocation for rural roads. The allocation was fully channelled, while the payment constraints arose because almost all of the current year’s allocation had already been spent,” he said in a statement on Wednesday.
Johan was responding to concerns raised by Deputy Prime Minister and Rural and Regional Development Minister Datuk Seri Dr Ahmad Zahid Hamidi over difficulties faced by contractors working on government projects due to delayed payments.
Ahmad Zahid had earlier clarified that he was not angry but “heated” by the situation, particularly after seeing the impact payment delays were having on contractors. He also stressed that the issue needed to be resolved to prevent payment problems from continuing.
Johan said every ministry was responsible for planning and managing its spending according to the annual allocations approved by Parliament. He added that KKDW had, over the past several years, made commitments and incurred expenditure above its approved annual allocations for rural road projects.
MoF records showed that KKDW received RM1.1 billion in 2022 and spent the same amount. However, spending rose above the approved allocation in the following years.
In 2023, KKDW was allocated RM1.1 billion but recorded actual expenditure of RM1.8 billion. In 2024, the ministry received RM1.3 billion but spent RM2 billion, while its RM1.6 billion allocation in 2025 was followed by actual expenditure of RM2.3 billion.
For 2026, KKDW was allocated RM2.1 billion, of which RM1.9 billion had been spent as of June.
Johan said MoF was working with KKDW to address the issue, including by reprioritising and restructuring the ministry’s allocations according to its needs.
He added that MoF had approved an additional RM300 million for 2026 to help settle outstanding payments owed to contractors.
At the same time, MoF is identifying savings from other ministries that could be redirected to help cover KKDW’s commitments that have exceeded its approved allocation.
Johan said the move was part of ongoing efforts to manage the situation and ensure contractors affected by the payment delays could have their outstanding claims addressed.
