Kuala lumpur: The World Bank acknowledged the government’s efforts to safeguard Malaysia’s long-term fiscal sustainability but maintained a cautious stance on the lower development expenditure (DE) outlined in Budget 2026.
According to BERNAMA News Agency, World Bank lead economist for Malaysia Dr. Apurva Sanghi emphasized the benefits of budget consolidation-reducing government deficit and debt-while highlighting the importance of a balanced approach. Dr. Sanghi noted that while the 12th Malaysia Plan (MP) saw an average annual DE of 4.4 percent of the gross domestic product, the 13th MP has seen this figure reduced to 3.3 percent per year.
Dr. Sanghi shared these insights during the 2026 Post-Budget Debate organized by the Malaysian Economic Association. He was among the panellists at the session in conjunction with Budget 2026, which was tabled last Friday. Other panellists included Treasury secretary-general Datuk Johan Mahmood Merican, MNRB Holdings Bhd senior vice president and group chief investment officer Durraini Baharuddin, University of Nottingham Malaysia’s Dr. Tricia Yeoh, and Tratax Sdn Bhd executive director Thenesh Kannaa.
In 2024, the government allocated RM90 billion for the country’s DE, while Budget 2026, announced by Prime Minister Datuk Seri Anwar Ibrahim, set the federal DE allocation at RM81 billion. Dr. Sanghi commented on this reduction, stating, “Development spending has come down, and that is one way in which the government is meeting its fiscal deficit target, but we believe that cutting development is not the ideal way to meet it.”
Meanwhile, Johan Mahmood Merican discussed how Budget 2026 aims to help local companies navigate the global economic slowdown and uncertainties. He noted that the budget places a clear emphasis on priority sectors and provides financing support for small and medium enterprises, aligning its strategy with the MADANI Economy framework and the New Industrial Master Plan (2030). Johan highlighted that while not immediately apparent from the Budget 2026 main speech, there is a strong focus across various sectors, particularly in semiconductors, which are receiving government funding and investments from government-linked investment companies. Additionally, areas such as energy transition towards renewable sources and the start-up ecosystem were also emphasized.