kuala lumpur: According to economist Geoffrey Williams, Budget 2026 represents a clear shift in Malaysia’s fiscal strategy, prioritizing efficiency and discipline over new taxes.
He said the government has demonstrated that it can manage fiscal consolidation while maintaining allocations for key sectors.
“The common belief that the government should tax more to spend more has been broken,” Williams said during an interview on Bernama World.
He said the government can create fiscal space by curbing wastage, leakages and corruption instead of increasing taxes.
Williams described the budget as “the final step in fiscal housekeeping”, reflecting tighter spending controls and better administration.
Although it is officially valued at RM470 billion, a significant portion comes from government-linked entities, making it effectively smaller than the 2025 budget.
“This budget is smaller than the 2025 plan and represents a real turn in fiscal policy,” he said.
The economist said revenue growth is expected from existing sources supported by enforcement measures.
Total revenues are expected to be higher next year without the emphasis on higher taxes.
The government is saving RM15.5 billion in subsidy rationalization and has recovered another RM15.5 billion through anti-corruption efforts.
Williams downplayed the inflation risks from targeted subsidies, noting that the measures involve reallocation rather than additional spending.
“The government’s inflation forecast for next year is that it will not go above 2%, which is probably right,” he said.
He does not see any significant inflationary consequences from these rationalization changes. – Bernama
