KUALA LUMPUR: Budget 2026 represents a clear shift in Malaysia’s fiscal strategy, prioritising efficiency and discipline over new taxes, according to economist Geoffrey Williams.
He said the government has demonstrated it can manage fiscal consolidation while maintaining allocations for key sectors.
“The general narrative that the government should tax more to spend more has been broken,“ Williams stated during an interview on Bernama World.
He explained the government can create fiscal space by cracking down on wastage, leakages and corruption rather than increasing taxes.
Williams described the budget as “a final phase in fiscal housekeeping” reflecting tighter spending controls and improved governance.
Although officially valued at RM470 billion, a significant portion comes from government-linked entities, making it effectively smaller than the 2025 budget.
“This budget is smaller than what was planned for 2025, and that shows a real turning point in fiscal policy,“ he added.
The economist noted revenue growth is expected from existing sources supported by enhanced enforcement measures.
Overall revenue is expected to be higher next year without pushing for higher taxes.
The government is saving RM15.5 billion in subsidy rationalisation and has recovered another RM15.5 billion through anti-corruption efforts.
Williams downplayed inflationary risks from targeted subsidies, noting the measures involve reallocations rather than additional spending.
“The government’s inflation forecast for next year is that it won’t go above 2%, which is probably about right,“ he said.
He sees no particular inflationary consequences from these rationalisation changes. – Bernama
