KOTA KINABALU, Dec 12 — The Sabah government today tabled a RM6.43 billion Budget for 2026, projecting a modest surplus of RM28 million despite an expected dip in state revenue due to weaker global commodity prices.

Finance Minister Datuk Seri Masidi Manjun said the estimated supply expenditure for 2026 stands at RM6.402 billion, against an estimated revenue of RM6.430 billion.

This marks a slight reduction from the record RM6.421 billion Budget tabled for 2025, but Masidi said the state had to recalibrate its estimates amid declining crude oil revenue and uncertainty surrounding global commodity trends.

“Sabah’s economy structure is still exposed given its dependency on the two main commodities, crude oil (CO) and crude palm oil (CPO), which are sensitive to global price fluctuations, production levels and US dollar (USD) exchange rate.

“Although CPO prices remain above RM4,000, it is only able to partially offset the decline in revenue from CO-based commodities, as CO prices are currently below USD 65. Due to these factors, the year 2026 revenue estimate is expected to decline compared with the revised estimates year 2025, with the total projected amount to reach RM6.430 billion.” he said.

Much of the revenue still comes from tax revenue which is expected to contribute RM2.771 billion, largely driven by state sales tax collection of RM2.614 billion, followed by land rent and port dues.

Meanwhile, non-tax revenue is projected at RM2.348 billion, driven primarily by petroleum royalties totalling RM1.075 billion, timber royalties and export duties, investment income, water sales and land premiums.

A further RM1.311 billion is expected from non-revenue receipts, mostly comprising federal government contributions.

On the expenditure side, RM5.202 billion of the RM6.402 billion total will fund operational costs, while RM1.2 billion will be channelled into the Development Fund.

Masidi said overall operational spending has been trimmed slightly by RM19.35 million, or 0.3 per cent, following a restructuring of the supply and development accounts.

Recurrent expenditure is set at RM2.22 billion, a 2.2 per cent reduction from 2025, to cover service and supply costs, operational works, asset procurement and administrative spending.

Special expenditure decreases to RM2.045 billion, down 9.8 per cent, as several items have been migrated to development expenditure under the new restructuring.

Remaining special expenditures will fund assistance to government agencies, paddy cultivation subsidies, outsourced water treatment and concession services, centralised vehicle and boat procurement, and agricultural programmes.

During his speech, Masidi also said that Sabah’s economic performance continues to improve, with poverty declining from 19.7 per cent in 2022 to 17.7 per cent in 2024, and average household income rising to RM6,498.

Inflation remains low at 1.1 per cent, below the national 1.4 per cent rate.

The services sector continues to dominate Sabah’s economy at 52.4 per cent, followed by mining and quarrying at 22 per cent and agriculture at 14.5 per cent.

The 2026 Budget also includes rebranding and expanded functions for several state ministries to enhance administrative efficiency.

The Sabah Works Ministry is now known as the Works and Utilities Ministry, while the Ministry of Community Development and People’s Wellbeing is rebranded as the Ministry of Women, Health and People’s Wellbeing.

The Ministry of Industrial Development and Entrepreneurship will be known as the Ministry of Industry, Entrepreneurship and Transportation.

The Ministry of Science, Technology and Innovation will be known as the Ministry of Education, Science, Technology and Innovation.

The Sabah Ministry of Youth and Sports is renamed the Ministry of Youth, Sports Development and Creative Economy.

The sitting will reconvene on December 15 until December 17.