Kuala lumpur: Malaysia’s cumulative fiscal deficit narrowed by 10.6 per cent year-on-year (y-o-y) to RM49.4 billion as of August 2025, keeping the government on track to meet its full-year target of RM80 billion or 3.8 per cent of gross domestic product (GDP).

According to BERNAMA News Agency, CIMB Investment Bank Bhd, in its Treasury and Markets Research report today, stated that the country recorded a smaller monthly deficit of RM2.7 billion in August, marking the lowest in 11 months. This was underpinned by a 0.3 per cent y-o-y decline in revenue and a 0.8 per cent y-o-y increase in expenditure.

The report highlighted that revenue increased to an average of RM30 billion in July-August, rising from RM25 billion in the first half of 2025. This increase was attributed to an expansion in e-invoicing and Sales and Service Tax (SST) coverage.

The report also noted that overall market sentiment remained cautious amid expectations of a RM10 billion to RM15 billion corporate bond pipeline this month and the reop
ening of the 30-year Malaysian Government Securities (MGS) 07/55 auction, scheduled for Monday (Oct 6). This will be the final 30-year issuance for the year, comprising a RM3 billion public tender and a RM2 billion private placement.

Looking ahead to the Budget 2026, which will be tabled on Oct 10, CIMB projected that the government is expected to balance accommodative measures with continued fiscal consolidation, projecting a smaller deficit of 3.6 per cent of GDP. Fiscal space is reportedly supported by revenue growth through a broader tax base and the repurposing of energy subsidies into cash transfers to support household spending, while development expenditure is expected to rise in the first year of the 13th Malaysia Plan.