Govt Fiscal Policy To Balance Economic Growth And People’s Needs, Says Treasury Sec-gen

By Anas Abu Hassan

PUTRAJAYA, Oct 20 (Bernama) -- The government's fiscal policy remains committed to supporting the country's development objectives while ensuring that the well-being of the people continues  to be a top priority, Treasury secretary-general Datuk Johan Mahmood Merican said.

He said the government is dedicated to responsible fiscal management while ensuring adequate fiscal support is provided for economic growth.

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"The government will balance that objective with ensuring that it still provides sufficient fiscal support, but more importantly, that we have sufficient expenditure to meet the needs of the rakyat, especially development needs," he told Bernama in an exclusive interview recently.

In pursuing fiscal consolidation, Johan said the government must avoid reducing the deficit too rapidly, as it still needs to address the people’s needs outlined in Budget 2026 — particularly since it marks the first spending under the 13th Malaysia Plan.

According to him,  the MADANI government has made significant progress in fiscal consolidation since taking office, with the deficit reduced from 5.6 per cent in 2022 to five per cent in 2023, 4.1 per cent in 2024, and on track to reach 3.8 per cent this year.

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He said managing a responsible fiscal policy is a balancing act — to give confidence to investors while ensuring sufficient spending for the people’s development.

"For example, this year, we are spending RM66 billion on education, while allocations for Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA) stand at RM15 billion, double the amount in 2022,” he said.

Johan noted that the strengthening of the ringgit this year, together with Malaysia’s improved standing in the IMD World Competitiveness Ranking and higher approved investments, reflects growing investor confidence in the country.

“So it is important that we continue to instil confidence in responsible fiscal management among investors. At the end of the day, what matters most is that it translates to the rakyat, as one of the positive indicators we have seen is the declining unemployment rate,” he added.

Four per cent growth next year is within reach

According to Johan, the government remains confident of reaching at least four per cent growth next year. Given the potentially softer outlook, it is important that the government maintains sufficient fiscal support for the economy. 

Hence, the government is maintaining an expansionary fiscal stance, with Budget 2026 set at RM470 billion — a positive increase compared to RM452 billion in the previous budget.

"There is growth when we take into account spending by government-linked companies (GLCs) and government-linked investment companies (GLICs).

"Even with the volatilities and uncertainties arising from the global scenario, we have seen that our economy has shown strong resilience. In the first half of 2025, we recorded growth of 4.4 per cent.

"Given the global uncertainties, we want to ensure that there is enough fiscal support to sustain the economy’s growth momentum,” he said.

The Department of Statistics Malaysia (DOSM) recently released the advanced gross domestic product (GDP) estimates, projecting that Malaysia’s economy will expand by 5.2 per cent in the third quarter of 2025. 

-- BERNAMA