The Finance Ministry has 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.
The ministry said this is in light of the global supply crisis and the government’s ballooning subsidy bill.
“The move is part of a prudent fiscal approach to optimise government resources to continue maintaining support for the people.
“The Finance Ministry also wishes to emphasise that the recalibration will be done without affecting economic stability and critical services to the people,” it said.
Meanwhile, when questioned at his weekly press conference today, Communications Minister Fahmi Fadzil said the government has no plans to retable Budget 2026.
Earlier, Reuters reported that Treasury secretary-general Johan Mahmood Merican issued a directive today ordering ministries and government agencies to cut their operating budgets.
He reportedly cited the sharp spike in energy prices stemming from the conflict in West Asia, causing the government’s subsidy bill to be projected to reach RM58.4 billion this year, compared to the RM15 billion originally allocated under the budget.
As such, he said all ministries, departments and agencies are to review their operational expenditures for the year and submit their proposals for spending cuts by May 15.
Malaysiakini understands that the directive was classified as “confidential” (sulit).
Reducing operating expenses
Free Malaysia Today reported that the Finance Ministry directive proposed that RM10 billion in savings could be made by reducing operating expenses.
Of these, RM3.06 billion could come from the Health Ministry’s RM46.5 billion budget, while RM2.39 billion could come from the Higher Education Ministry’s RM18.6 billion budget.
The Treasury could be cutting RM664 million from its own budget, while the Home Ministry and Defence Ministry could reduce their budget by RM647 million and RM508 million, respectively.
Other multi-million ringgit cost reductions suggested include the Rural and Regional Development Ministry (RM571 million), the Education Ministry (RM466 million), and the Digital Ministry (RM508 million).
The directive also reportedly called for an indefinite freeze on new posts and intakes of civil servants, except for critical roles in sectors like education, health, security, enforcement, and revenue collection.
In these instances, it said the hiring process should be subject to strict control by the Public Services Department and the Finance Ministry.
Meanwhile, “unnecessary” official events, meetings, conferences, seminars, and workshops are to be postponed, while those deemed necessary are to be scaled down.
It also encouraged necessary courses and training to be held online instead of in person. - Mkini
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