KUALA LUMPUR: The government has allocated a total of RM419.2 billion under Budget 2026, representing 19.7% of gross domestic product (GDP), said the Ministry of Finance (MoF).
It was an increase of 1.7% from the revised Budget 2025, it said.
In its Fiscal Outlook and Federal Government Revenue Estimates 2026 report released today, the MoF said the government has revised the 2025 total expenditure to RM412.1 billion, down from the approved allocation of RM421 billion announced in Budget 2025.
Regarding the RM419.2 billion allocation in Budget 2026, the MoF said RM338.2 billion, or 80.7% of the budget, is designated for operating expenses (OE), with the remaining RM81 billion allocated for development expenses (DE).
The ministry said that the bulk of the allocation, amounting to 32.1% of the total, is channelled to the Ministry of Education (MoE), Ministry of Health (MoH) and Ministry of Defence.
“In terms of sectoral allocation, the social sector will receive RM155.9 billion, or 37.2% of the overall budget, followed by the economy (RM58.9 billion, or 14.1%), security (RM44.5 billion, or 10.6%) and general administration (RM20.7 billion, or 4.9%) sectors.
“The balance of 33.2% is budgeted under charged expenditures and transfer payments,” it said.
The MoF said that the budgeted OE is equivalent to 15.9% of GDP, representing an increase of 1.8% from the revised Budget 2025.
The ministry highlighted that emoluments remain the largest component of OE, projected to grow by 5.6% to RM109.4 billion, mainly attributed to the second phase of the Public Service Remuneration System (SSPA) implementation, which includes a seven per cent basic salary increase for civil servants in Grade 15 and below.
It elaborated that subsidies and social assistance, which constitute 14.5% of OE, are projected to decrease by 14.1% to RM49 billion in 2026.
“The decline in subsidies and social assistance is mainly due to lower global commodity prices and subsidy rationalisation efforts, which include implementation of the BUDI95 programme,” it said.
The MoF also revealed that the government will provide a total of RM1 billion in loans through DE to improve infrastructure and enhance the quality of life of the rakyat next year.
It added that the revision of 2025’s expenditure to RM412.1 billion from RM421 billion earlier was due to optimisation of emoluments and lower debt service charges (DSC), as well as a lesser disbursement for DE.
Of this revised total, 80.6% is allocated to OE, while the remaining 19.4% has been earmarked for DE.
The total OE in 2025 is estimated at RM332.1 billion compared with the initial allocation of RM335 billion.
“This adjustment is mainly due to the optimisation of emoluments, retirement charges, DSC and grants to statutory bodies,” said the MoF.
The MoF added that the DE in 2025 is estimated to decrease by 4.8% to RM80 billion, primarily due to lower spending requirements in the economic sector. – Bernama
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