Kuala Lumpur: The federal government’s fiscal deficit decreased to RM21.9 billion in the first quarter of 2025 (1Q 2025), compared to RM26.4 billion in the same period last year, indicating that fiscal consolidation remains on the right track.

According to BERNAMA News Agency, the Ministry of Finance (MoF) attributed the lower quarterly fiscal deficit to better revenue collection and expenditure optimisation in consonance with fiscal consolidation initiatives. The MoF published its 1Q 2025 Malaysian Economy report, providing an overview of the country’s macroeconomic performance and fiscal position.

The report, issued quarterly, is part of the MADANI Government’s commitment to greater transparency and accountability in the stewardship of public finances. The federal government revenue rebounded by three per cent from the corresponding quarter in 2024 to RM72.1 billion, driven by higher tax collection, particularly from a surge in sales and service tax (SST) receipts as well as higher collection of individual income tax.

Meanwhile, total expenditure contracted by 2.5 per cent to RM94.2 billion, primarily due to lower subsidy spending following the implementation of the diesel subsidy retargeting programme and lower global oil prices. Despite this, targeted social assistance programmes including Sumbangan Tunai Rahmah (STR), Sumbangan Asas Rahmah (SARA), Fish Landing Incentive, and Paddy Price Subsidy Scheme have been strengthened.

Additionally, grants to statutory bodies were optimised due to operational efficiency and effectiveness of the agencies. Malaysia’s real gross domestic product (GDP) grew by 4.4 per cent, outstripping the 4.2 per cent recorded in the corresponding quarter last year, driven by resilient domestic demand and sustained recovery across key sectors such as services, manufacturing, and construction.