KUALA LUMPUR, Oct 9 — The Federal Government has estimated Budget 2027 to be at RM459.8 billion, up 3.6 per cent from the revised 2026 allocation, equivalent to 19.8 per cent of gross domestic product (GDP).

According to the Ministry of Finance (MoF), the government revised Budget 2026 to RM441.1 billion from RM419.2 billion previously, reflecting adjustments in spending priorities and fiscal requirements during the year.

In its Fiscal Outlook and Federal Government Revenue Estimates 2027 report released today, the ministry said of the Budget 2027 allocation, RM376.8 billion or 81.9 per cent is for operating expenses (OE), while RM83 billion is earmarked for development expenditure (DE).

The government will continue to prioritise rakyat-centric projects and programmes, with 30.2 per cent of the total allocation channelled to the Ministry of Education, Ministry of Health and Ministry of Defence.

Allocation for OE

“The social sector will receive the largest share at RM161.6 billion (35.1 per cent) of total expenditure, reflecting the government’s continued emphasis on human capital development and public welfare.

“This is followed by the economic (RM59.4 billion; 12.9 per cent), security (RM46 billion; 10 per cent) and general administration (RM23.4 billion; 5.1 per cent) sectors,” MoF said, adding that the remaining RM169.4 billion comprises charged expenditures and transfer payments.

The ministry said the OE represents 16.2 per cent of GDP, up 3.8 per cent from the revised 2026 budget, due to higher allocations for emoluments, retirement charges, debt service charges (DSC) as well as supplies and services.

Emolument remains the largest component of OE at 29.6 per cent or RM111.6 billion, and is projected to grow by 2.9 per cent, reflecting annual salary increments.

The allocation for subsidies and social assistance is budgeted to decline marginally by 2.3 per cent to RM72.7 billion, accounting for 19.3 per cent of total OE.

Meanwhile, DSC is projected to increase by 6.5 per cent to RM61 billion, accounting for 16.2 per cent of OE, with domestic debt servicing constituting 98.4 per cent of the total.

Allocation for DE

According to MoF, DE is projected at RM83 billion for 2027, including allocations for about 1,500 newly approved programmes and projects.

“The economic sector continues to receive the largest share at 45.4 per cent, followed by social (33.7 per cent), security (14.7 per cent) and general administration (6.2 per cent) sectors,” the ministry said.

The government also remains committed to allocating at least three per cent of GDP to DE in line with the requirements of the Public Finance and Fiscal Responsibility Act 2023 [Act 850].

A total of RM37.7 billion is allocated for the economic sector to strengthen national competitiveness through the expansion of strategic infrastructure and promotion of investment activities.

Of the total, the transport subsector receives the largest share at RM17.6 billion (46.6 per cent) to improve nationwide connectivity and address traffic congestion.

The environment subsector receives RM3.6 billion to strengthen environmental resilience and advance the national climate change mitigation and nature conservation agenda.

Meanwhile, RM3.5 billion is allocated to the trade and industry subsector to support industrial development, entrepreneurship and investment-related activities.

The remaining are allocated for the social, health, housing, security and general subsectors, MoF said.

The government will also provide a total of RM1 billion in loans through DE to support infrastructure development and improve the people’s quality of life.

“State governments are the largest loan recipients at RM503 million, followed by companies (RM463 million), federal statutory bodies (RM58 million) as well as other organisations and cooperatives (RM2 million).

“Loan repayments are projected at RM1.5 billion. Of these, the highest repayments are anticipated from companies at RM955 million, followed by state governments (RM419 million), federal statutory bodies (RM120 million) as well as other organisations and cooperatives (RM6 million),” it added. — Bernama