CIMB Sees Malaysia's Budget Deficit At 3.6 Pct Of GDP In 2026

KUALA LUMPUR, Sept 18 (Bernama) -- CIMB Investment Bank Bhd expects a budget deficit of 3.6 per cent of gross domestic product (GDP) for Malaysia in 2026, with the government revenue expanding by four per cent to RM353.3 billion in 2026.

It said the rise in revenue to RM353.3 billion in 2026 will be supported by higher tax collections, underpinned by the full-year impact of the sales and service tax (SST) expansion, e-invoicing, tighter compliance, potential hikes in sin taxes, and the gradual rollout of a carbon tax for iron, steel, and energy.

“These gains are expected to offset weaker oil-related revenues and lower Petroliam Nasional Bhd (Petronas) dividends, in line with softer crude price,” it said in a research note today.

Meanwhile, the government’s operating expenditure is projected to increase 3.9 per cent to RM348.1 billion in 2026, with spending including Phase 2 of civil service salary adjustments in January 2026 (RM8 billion).

“We project Sumbangan Asas Rahmah (SARA) and Sumbangan Tunai Rahmah (STR) cash transfers to rise to RM17 billion in 2026 (2025: RM15 billion). Recent electricity tariff adjustments should also unlock fiscal savings, noting that RM5.9 billion was spent in the first half of 2025 (1H 2025),” it added. 

It said development expenditure is projected at RM87 billion (2025: RM86.0 billion), reflecting a sustained commitment to growth priorities.

“Clarity on the New Investment Incentive Framework, initially scheduled for the third quarter of 2025 (3Q 2025), is also anticipated in Budget 2026,” it said. 

The investment bank projects GDP growth at 4.1 per cent in 2026, revised down from 4.5 per cent, to account for weaker external demand and softer consumption and capex.

-- BERNAMA