Kuala lumpur: Budget 2026 will reinforce the government’s commitment to strengthening fiscal space, said MBSB Investment Bank Bhd (MBSB IB) today. In a research note, the investment bank highlighted that since 2021, the fiscal deficit has narrowed by more than two per cent of gross domestic product (GDP), providing greater room to introduce counter-cyclical stimulus measures during future downturns.

According to BERNAMA News Agency, in the forthcoming budget, which will be tabled on Oct 10, MBSB IB estimated that the government might allocate slightly more for Budget 2026, at around RM430 billion compared to RM421 billion in Budget 2025.

MBSB IB further projected that the size of the fiscal deficit will decrease to RM78 billion in 2026, pushing down the deficit-to-GDP ratio to -3.6 per cent against a forecast of -3.8 per cent in 2025, assuming that economic growth remains moderate at 4.0-4.5 per cent.