PM Anwar proposes record RM510 billion spending plan for 2027 budget

On Oct. 9, 2026, Malaysian Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim tabled a record national spending plan in the Dewan Rakyat, proposing an expansionary budget totalling RM510 billion for 2027, as reported by The Straits Times and The Star. The new financial blueprint marks a nearly 10 per cent increase from the RM470 billion outlined previously, driven by rising federal revenue and a concerted push to ease household financial pressures ahead of the 16th general election.

Mr. Anwar zeroed in on cost-of-living challenges as the primary issue burdening the public during his budget speech, pointing specifically to the middle-income M40 demographic that has faced persistent economic squeezes. To address these pressures, the government allocated more than RM80 billion for subsidies, aid, and incentives for 2027, which includes RM16 billion in cash aid slated to reach 13 million Malaysians.

Government Projects RM510 Billion Spending Framework for 2027

The record RM510 billion spending framework comprises RM376.8 billion in operating expenditure and RM83 billion in development expenditure, according to figures reported by The Star. Additional investment components feature RM25 billion from government-linked investment companies, RM11 billion from public-private partnerships, and RM14.2 billion from federal statutory bodies and MOF Inc. companies. To fund these expansions, the government projects federal revenue to climb to RM380.8 billion in 2027, up from an upgraded estimate of RM363.6 billion for 2026.

Corporate and high-income adjustments accompany the middle-class relief measures. Beginning in June 2027, the monthly minimum wage will rise from RM1,700 to RM2,000 for businesses with annual revenues exceeding RM50 million, benefiting approximately four million workers. Property buyers will also see relief under a proposal reported by The Edge Malaysia, which offers full stamp duty exemptions on loan agreements and transfer instruments for first homes priced up to RM500,000, and partial exemptions for properties valued between RM500,000 and RM750,000.

Fiscal Deficit Projects a Narrow to 3.3 per Cent

Despite the expansionary nature of the spending plan, the fiscal deficit is projected to narrow to 3.3 per cent of gross domestic product in 2027, down from an estimated 3.6 per cent for 2026 and 3.7 per cent in 2025. The 2026 deficit experienced upward pressure due to a soaring fuel subsidy bill of RM40 billion driven by the Middle East crisis, as noted by The Star. Government debt-to-GDP ratios are expected to continue a downward path, moving from 64 per cent in 2026 to 63.7 per cent in 2027.

Regional development features prominently in the 2027 financial plan, with BusinessToday Malaysia reporting that Sabah will receive RM18.7 billion in federal allocations, up from RM17.6 billion. This includes RM600 million dedicated to electricity supply continuity and power infrastructure upgrades. The federal government has tripled its interim special grant for Sabah and Sarawak to a total of RM1.5 billion, with payment scheduled for completion before the end of 2026.

Financial Package Aligns with February 2028 General Election

Political context heavily shapes the timing and structure of the 2027 financial package, as the Pakatan Harapan coalition manages the final stretch of its term before a general election that must be held by February 2028. Analysts cited by The Straits Times observed that Mr. Anwar brought forward fuel quota increases on Sept. 1 ahead of the formal budget presentation, indicating that the administration is optimising its strategy for an early electoral contest.

The government acknowledges the anxiety of the middle class who have been patient despite also being pressed by the burden of living costs.

Datuk Seri Anwar Ibrahim

More on this story: Malaysia Budget 2027: PM Anwar Hints at Special Allocations for Youth and Students