PUTRAJAYA, Oct 10 — The government will continue to focus on prudent fiscal management in Budget 2027 to return benefits to the people and reduce cost-of-living pressures, especially for low-income households, said Prime Minister Datuk Seri Anwar Ibrahim.

The prime minister said that savings from improved governance and efforts to curb leakages will be redirected to the people, in line with the need to strengthen the country’s financial position without compromising assistance to those in need.

Anwar, also the finance minister, said although Malaysia’s inflation rate is around two per cent, one of the lowest in the world, the public still feels cost-of-living pressures due to rising prices of goods and certain services.

“When people ask why this could not be done two years ago, we had to resolve several issues first. We had to address debt, be prudent, and set priorities,” he said in a special Madani Budget 2027 interview aired by RTM tonight.

Anwar noted that the government must balance the need to reduce debt and curb spending with the requirement to increase allocations for critical sectors such as defence, housing for service members and police, and school facilities.

According to him, this approach is important to ensure every ringgit the government spends delivers greater economic and social value for the people.

Anwar said the government’s fiscal space has improved through more disciplined financial management, but these savings must be safeguarded from erosion by leakages and waste.

He noted that a stronger fiscal position enables the government to provide assistance such as sports shoes for schoolchildren, as well as allowances and minimum income support for rubber smallholders and paddy farmers.

“This can all be achieved if we manage finances well and ensure that government expenditure truly reaches the targeted groups,” he stressed.

The prime minister said the government’s economic strategy also focuses on investments in high-value sectors such as information technology and artificial intelligence (AI), but these developments must be accompanied by measures to boost people’s income and productivity.

“Investments, IT, and AI are the things (referencing Budget 2027’s theme) we are ‘reaching for in the skies while anchored on our values’, meaning looking at issues like salaries, the price of goods, the needs of people with disabilities, and children who do not have access to basic facilities,” he said.

Anwar said solid economic growth must translate into quality job opportunities, higher wages, and reduced income inequality, and should not be measured solely by the gross domestic product growth rate.

He said the government would also continue to take into account the needs of social and cultural development in economic planning, including Islamic education training and aid to non-Muslim communities to maintain places of worship.

He acknowledged that Budget 2027 cannot solve all economic problems, but emphasised that the government’s fiscal policy would prioritise easing the burdens on the groups most affected by financial pressures.

In addition, Anwar explained that external factors and global markets influence part of the price of goods, for example, the cost of imported phosphate fertiliser via the Hormuz Strait following the crisis in West Asia.

According to him, fluctuations in commodity prices, logistics costs, and disruptions in international supply chains can directly impact domestic prices, limiting the government’s ability to control all prices.

Nevertheless, he said the government can still reduce price pressures by streamlining the supply chain, expanding farmers’ markets, and increasing sales of goods through the Federal Agricultural Marketing Authority.

Therefore, Anwar said the government would provide assistance and facilities based on the country’s financial capacity, with a more targeted approach to ensure public resources are not wasted.

As an example, he cited the decision to maintain subsidised RON95 petrol at RM1.99 per litre, even as global oil prices rise, as a measure to protect household disposable income.

He said the oil price used in the government’s initial projections was US$70 per barrel, but it rose to about US$110 per barrel, while RON95 petrol remained at RM1.99 per litre.

The decision, he said, reflects the government’s need to balance fiscal pressures from subsidies with the need to maintain stable transportation costs and the public’s purchasing power.

“Ultimately, in managing the national economy, the income and livelihoods of ordinary people become the measuring standards,” he said.

Anwar also emphasised that the government would continue to implement policies based on the country’s fiscal capacity, focusing on strengthening the economy, boosting productivity, reducing leakages, and protecting those most affected by cost-of-living pressures.

Yesterday, Anwar tabled Budget 2027 with the theme “Reaching for the Skies, While Anchored on Our Values,” with government allocations amounting to RM459.8 billion, plus RM25 billion in investments from government-linked investment companies (GLICs); RM11 billion in public-private investments; and RM14.2 billion in investments by Federal Statutory Bodies and the Minister of Finance (Incorporated), resulting in Budget 2027 as an expansionary fiscal policy of RM510 billion.

The Fifth Madani Budget aims to translate resilient economic growth into tangible benefits for the people through higher wages, more efficient targeted support, stronger fiscal discipline, and aggressive steps toward higher-value industries. — Bernama