The government reduced its subsidy expenditure by 40.1% to RM23.43 billion in 2025 from RM39.10 billion in 2024, according to the auditor-general’s report.
The report on the government’s financial statements for 2025 said the RM15.67 billion reduction was partly due to a significant decline in petroleum product subsidies, which fell from RM34.91 billion in 2024 to RM19.11 billion last year.
Lower oil prices, subsidy reforms drive decline
“The reduction in subsidy expenditure was partly due to the decline in global crude oil prices and initiatives to reform targeted diesel subsidies from June 2024 and petrol subsidies from September 2025,” the report said.
It said the average global crude oil price fell to US$69.05 per barrel in 2025 from US$80.81 per barrel in 2024.
Petrol subsidy expenditure fell 46.5% to RM10.51 billion from RM19.66 billion in 2024, while diesel subsidy spending declined 48.2% to RM5.98 billion from RM11.54 billion.
Liquefied petroleum gas subsidy expenditure also decreased 29.1% to RM2.63 billion from RM3.71 billion.
Welfare assistance expenditure surges
Meanwhile, expenditure on welfare grants and assistance for communities, individuals and families increased 380.8% to RM20.36 billion in 2025 from RM4.24 billion in 2024.
“The increase in expenditure was partly due to the disbursement of Sumbangan Asas Rahmah, Sumbangan Tunai Rahmah (STR), the Madani Subsidy Assistance Programme and STR operating costs,” the report said.
