PETALING JAYA: The federal government has allocated RM459.84 billion under the 2027 budget, an increase of about RM40 billion from the RM419.2 billion allocated for 2026.
Operating expenditure accounts for RM376.8 billion, or about 82% of the total budget, while RM83 billion has been set aside for development expenditure.
The operating expenditure allocation represents a 3.8% increase from the RM338.2 billion allocated in 2026, while development expenditure has risen slightly from RM81 billion this year.
According to the Finance Ministry’s 2027 fiscal outlook report, operating expenditure will focus on essential public services and targeted assistance for Malaysians, including social aid and subsidies.
About 82.8% of the budget will be funded by tax and non-tax revenue, while borrowings and the use of government assets will account for the remaining 17.2%.
The government’s revenue is projected to increase by 4.7% in 2027 to RM380.8 billion, based on expectations of resilient but moderating economic growth.
Social sector receives largest share of operating expenditure
The Treasury report said the social sector would receive the largest share of operating expenditure at RM161.6 billion, followed by the economy at RM59.4 billion, security at RM46 billion and general administration at RM23.4 billion.
‘Expenditures will remain concentrated on rakyat-centric projects and programmes, with 30.2% of the total allocation channelled to the education, health and defence ministries,’ it said.
The allocation for subsidies and social assistance has decreased by 2.3% to RM72.7 billion, attributed to targeted subsidy schemes and expected improvements in subsidy management.
Emoluments remain the largest component of operating expenditure at RM91.56 billion, accounting for 24.3% of the total, followed by subsidies and social assistance at RM59.53 billion, or 15.8%.
The report attributed the emoluments allocation to annual salary increments and additional funding to strengthen manpower in the health and education sectors.
Retirement charges are also expected to increase by 4.24% to RM44.6 billion, reflecting growing pension-related commitments as the number of pensioners and beneficiaries expands.
1,500 new programmes and projects planned
The Finance Ministry said the RM83 billion development expenditure allocation would cover 1,500 new programmes and projects.
The economic sector will receive 45.4% of the development allocation, followed by the social sector at 33.7% and security at 14.7%.
‘A total of RM37.7 billion is allocated for the economic sector to strengthen national competitiveness through the expansion of strategic infrastructure and the promotion of investment activities,’ the report said.
The transport, environment, and trade and industry subsectors will receive the largest shares of the allocation.
This reflects the government’s continued emphasis on improving connectivity, supporting sustainable development and strengthening the investment ecosystem, the report added.
