Zahid Rejects RM2.1 Billion Overspending Claims

Malaysia’s rural spending figures became the center of a parliamentary clash on Oct 26, 2026, when Ahmad Zahid Hamidi rejected accusations of a RM2.1 billion overspending gap. Speaking in the Dewan Rakyat during the winding-up session for the 2027 budget, Zahid insisted that his ministry had in fact underspent its revised budgets.

Budget Discrepancies and Revised Allocations in Dewan Rakyat

Zahid, the Rural and Regional Development Minister, explained that the alleged excess expenditure of RM2.1 billion was simply the numerical difference between the ministry’s initial allocation and its actual spending over a three-year period. According to his figures, the ministry spent a total of RM6.108 billion between 2023 and 2025 against an initial allocation of just RM3.982 billion.

Zahid pointed to subsequent financial adjustments that raised the approved budget to RM6.143 billion. When measured against that revised figure, actual spending left a balance of roughly RM34.3 million. He stressed that every budget modification required strict adherence to government procedures involving the Economy Ministry, the Finance Ministry, and the Accountant General’s Department of Malaysia.

Treasury Data and Contractor Payment Arrears

The controversy first erupted after contractors working on rural projects faced severe cash flow issues and delayed payments, prompting Zahid to voice frustration over unpaid milestones. In his reply, Treasury secretary-general Johan Mahmood Merican noted that the ministry had continuously surpassed its sanctioned funding for rural road initiatives, utilizing RM1.8 billion in 2023 relative to the RM1.1 billion approved limit, RM2 billion in 2024 against an approved RM1.3 billion, and RM2.3 billion in 2025 compared to a sanctioned RM1.6 billion.

The Finance Ministry intervened by halting the ministry’s use of the Pre-Qualified Open Tender procurement method after the Auditor-General’s Report No. 2/2025 found it failed to meet its objectives. The Ministry of Finance also instructed the ministry on Sept 10 to defer issuing new letters of acceptance for rural road projects to contain accumulating arrears.

Auditor General Findings and Investigation Calls

DAP adviser Lim Guan Eng had earlier called on the Malaysian Anti-Corruption Commission to investigate the ministry over the purported overspending. Lim questioned how the spending exceeded original approvals by billions and whether proper procurement rules were followed.

Zahid cautioned lawmakers against making unverified accusations of corruption and embezzlement, arguing that such claims undermine the integrity of civil servants and damage the ministry’s reputation. Meanwhile, without providing further details, he claimed that the treasury secretary-general had directed the suspension of various projects in Sabah and Sarawak despite the prior allocation of funds.

Financial Restructuring and Future Allocations

To stabilize the ministry’s finances, the Finance Ministry approved an additional RM500 million for 2026 by reallocating development expenditure savings from other ministries. In addition, the Ministry of Finance consented to lift the spending ceilings for rural roads to RM2.11 billion for the year 2026 and RM2.27 billion for 2027.

The Ministry of Finance mandated that the department submit estimated budget necessities for rural road schemes covering the conclusion of 2026 as well as the entirety of 2027, calculated from previously finalized contracts. Up to August 31, 2026, the updated financial provision for rural road works reached RM2.40 billion, out of which RM2 billion had been disbursed.