PETALING JAYA: The Treasury has issued ministries and agencies guidelines to reorganise their priorities related to operating expenditures, in line with challenges posed by the ongoing global energy supply crisis and increase in subsidy burdens.
The Finance Ministry said this measure formed part of a prudent fiscal management approach to optimise government resources while ensuring continued support for the people.
“Spending adjustments will be made without affecting critical services to the people and economic stability,” it said in a statement yesterday.
The Treasury had earlier ordered government ministries and agencies to cut their operating expenditures due to the impact of the Middle East conflict.
In a separate directive issued, Finance Ministry secretary-general Datuk Johan Mahmood Merican said the National Budget Office was asked to review the remaining estimated expenditures under the 2026 budget.
He said the approved Budget 2026 allocated only RM15bil for subsidies, a sharp reduction from previous years, given that fuel subsidies alone amounted to RM38bil in 2023.
All ministries, departments and agencies, he said, were to review their remaining operational expenditures for the year in order to save costs.
The proposed cuts include salaries and allowances for unfilled vacancies, a 10% reduction on services, supplies and assets, as well as a 20% cut on budgets for federal statutory bodies and companies limited by guarantees.
All ministries, departments and agencies have been given until May 15 to submit their proposed budget reviews to the National Budget Office.
“As you are aware, the geopolitical situation caused by the war in Midde East has resulted in restrictions in the Strait of Hormuz, which triggered an acute spike in the price of crude oil.
“This external factor has increased logistical costs, which has a direct impact on the cost of living for Malaysians,” he said in the directive.
The directive also contained suggested cost savings that could be achieved by various ministries, departments and agencies, but without a breakdown of where the savings would come from.
It also encouraged necessary courses and trainings to be held online instead of in person.
The ministry also ordered an indefinite delay of new posts and intakes of civil servants, except for critical roles in sectors like education, health, security, enforcement and revenue collection.
In these instances, it said the hiring process should be subject to strict control by the Public Services Department and Finance Ministry.
At a separate press conference, government spokesperson Datuk Fahmi Fadzil said all ministries have been notified of adjustments to their operating expenditure as part of the government’s efforts to streamline activities amid ongoing global supply challenges.
“Each ministry has received a notification from the Finance Ministry regarding certain adjustments to operating expenditure.
“This is in line with the government’s intention to coordinate activities, programmes and implementation, especially as Malaysia faces challenges arising from the global supply crisis,” Fahmi said during his weekly press conference at Angkasapuri.
He added that clear guidelines have been provided, but further details would be worked out through discussions involving the secretaries-general of each ministry, Chief Secretary to the Government Tan Sri Mohd Zuki Ali and the Treasury secretary-general.
Asked if there were plans to review Budget 2026, Fahmi said there were none.
He also said Prime Minister Datuk Seri Anwar Ibrahim had stressed that all official events, workshops and large-scale activities organised by ministries, agencies, statutory bodies, government-linked companies and government-linked investment companies be held on a moderate scale.
