The government’s total expenditure for 2025 is set to increase to RM421 billion, or 20.2% of the GDP, driven by higher emoluments, retirement charges from the Public Service Remuneration System (SSPA), and increased debt service payments. Operating expenditures (OE) will account for RM335 billion, or 16.1% of GDP, while development expenditures (DE) are projected to remain at RM86 billion, or 4.1% of GDP.
Govt Aims to Optimize
According to the Fiscal Outlook and Federal Government Revenue Estimates report, efforts will be made to optimize spending, including rationalizing statutory bodies to reduce overlapping functions. The DE will prioritize the economic sector, focusing on infrastructure projects such as flood mitigation, water supply, highway construction, healthcare, and educational facilities.
Additionally, the fiscal deficit is targeted to drop to 3.8% of GDP in 2025, aiming to create fiscal space to handle global uncertainties and lower long-term debt burdens. The primary balance deficit is expected to narrow to 1.2% of GDP as part of a prudent approach to bolster economic resilience and sustain growth.
