Several analysts have warned that the government’s move to cut about RM10 billion in operating expenditure, including an estimated RM3 billion from the Health Ministry, risks creating short-term savings that could lead to higher costs in the future.
Pro-vice-chancellor and dean of the Graduate Studies Institute at Universiti Sains dan Teknologi Malaysia, Barjoyai Bardai, said the country’s main fiscal issue is not merely operational spending, but an imbalanced subsidy structure.
He noted that national subsidy costs are estimated to reach RM58.4 billion based on current market prices, while allocations in Budget 2026 stand at only around RM15 billion under a targeted subsidy approach.
“At the same time, the Finance Ministry is proposing savings of about RM10 billion across ministries through operating expenditure. But the real problem is not operational spending, it is the unsustainable design of subsidies,” he told Malaysiakini.
Barjoyai said savings achieved through cutting government operations would have a limited impact and could instead undermine essential public services.
He said sectors at risk include the Health Ministry, with a proposed RM3.06 billion in cuts, potentially involving reduced medicine supplies, delays in facility upgrades and increased pressure on healthcare workers.
The higher education sector faces potential cuts of RM2.39 billion, which could affect grants for public universities, scholarships and research, he added.
Barjoyai said such a situation could trigger a “false economy”, where short-term savings ultimately drive up long-term national costs.
“Lower investment in preventive healthcare or education will increase treatment costs and reduce national productivity,” he said.
He therefore proposed accelerating targeted subsidy reforms, including the use of household income data, taxation of the digital and gig economy, and audits to address subsidy leakages.
‘Higher costs in the future’
Universiti Malaya sociopolitical analyst Awang Azman Awang Pawi said fiscal savings must be viewed in balance between financial discipline and social responsibility.
The fellow of Akademi Kenegaraan Malaysia said from a macroeconomic perspective, the move could be understood as an effort by the government to control the deficit and strengthen the country’s financial position amid global uncertainty, including geopolitical conflicts and energy price pressures.
However, he stressed that the healthcare sector cannot be approached through a linear fiscal-saving lens, as the country’s public health system has long faced multiple pressures.
These challenges include workforce shortages, limited facility capacity, and rising demand driven by demographic changes and the growing burden of non-communicable diseases, he said.
“Although the reduction may appear small in relative terms, its impact could be significant on daily operations such as delayed facility upgrades, constraints in equipment procurement and longer patient waiting times,” Awang said.
He also warned that pressure on healthcare workers could increase, potentially affecting the overall quality of public services.
At the same time, Awang echoed Barjoyai in warning of the risk of a “false economy” phenomenon, where short-term savings ultimately result in higher future costs.
He said that when early treatment is delayed or access to healthcare becomes more difficult, illnesses may worsen and require more expensive treatment.
“This not only burdens the healthcare system in the future but also affects the country’s economic productivity when the population is not in optimal health,” he explained.
From a political and public perception standpoint, Awang described cuts in the healthcare sector as a sensitive move, particularly amid still-challenging cost-of-living conditions.
“People view healthcare as a fundamental right that must be protected. Any reduction in allocation is easily interpreted as a decline in the government’s commitment to public welfare, especially for the B40 group and the middle class,” he said.
On Wednesday, the Finance Ministry confirmed issuing guidelines telling ministries and government agencies to reprioritise operational expenses, following reports that the government has ordered RM10 billion to be slashed from the original RM229 billion approved as operational expenses under Budget 2026.
On the same day, Communications Minister Fahmi Fadzil, however, said the government has no plans to re-table Budget 2026. - Mkini
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