KOTA KINABALU: Sabah has outlined a deliberate shift in spending priorities under its 2026 Budget, reducing operating expenditure while allocating a larger share of spending towards development in an effort to strengthen fiscal discipline and long-term sustainability.
Finance Minister Datuk Seri Masidi Manjun said operating expenditure for 2026 is estimated at RM4.998bil, accounting for 78% of total spending, down from 86% in 2024 and 80% in 2025. Development expenditure, meanwhile, is estimated at RM1.404bil, or 22% of total spending.
Masidi said the reduction reflects a continued effort by the state government to rein in operating expenditure over several budget cycles, rather than a one-off adjustment, as part of a broader strategy to rebalance spending.
He said the state would continue to control operating expenditure to ensure more resources could be channelled towards development spending.
“This approach allows the state to prioritise development expenditure to stimulate economic growth, improve the well-being of the people and strengthen Sabah’s economic resilience,” he said when tabling the Sabah Budget 2026 at the State Legislative Assembly on Friday (Dec 12).
Masidi said prioritising development expenditure was crucial to ensuring that government spending translated into tangible economic impact, particularly in strengthening the state’s economic capacity and resilience over the longer term.
“This prudent spending approach adopted under Budget 2026 is aligned with the state government’s commitment to ensuring Sabah’s fiscal position remains sustainable in the medium and long term,” he said.
Under Budget 2026, total expenditure is estimated at RM6.402bil against projected revenue of RM6.430bil, resulting in a surplus of RM28mil, which Masidi said reflected the state’s commitment to prudent spending management.
Meanwhile, Masidi said the Sabah government has reaffirmed its constitutional right to a 40% special grant from the Federal Government, following a High Court decision that confirmed the state’s entitlement under the Federal Constitution.
He said the state welcomed the court ruling, which upheld Sabah’s constitutional right to the special grant under Articles 112C and 112D of the Federal Constitution, saying the decision marked an important development in Sabah’s long-standing pursuit of its constitutional entitlement.
“The Sabah government will continue negotiations with the Federal Government through the Special Grant Negotiation Committee. The first meeting of the committee was held on Nov 17, 2025, and the state government remains committed to resolving this matter through institutional channels and constitutional provisions,” Masidi said.
