KUALA LUMPUR: Malaysia's monthly petroleum subsidy bill eased to approximately RM3bil between June and August this year, down from a peak of nearly RM5bil in March and April, although the government still expects its total fuel subsidy expenditure to reach RM40bil for the year.
The Finance Ministry said the moderation followed a sharp increase in global crude oil prices amid the Middle East conflict, which placed considerable pressure on the government's finances.
"The government has faced significant fiscal pressure as the global supply crisis has led to higher subsidy expenditure, particularly for fuel and utilities.
"The conflict in the Middle East pushed global crude oil prices above US$120 per barrel, and Malaysia has not been spared the effects of this crisis," the ministry said in a written parliamentary reply on Wednesday (Oct 28).
It said subsidies for petrol, diesel and liquefied petroleum gas (LPG), which stood at approximately RM800mil monthly in January and February, had surged to nearly RM5bil monthly in March and April.
"The government's subsidy burden has now moderated to approximately RM3bil monthly from June to August 2026.
"Based on the latest projections, the government estimates that petroleum product subsidies for 2026 will amount to RM40bil," it said.
Datuk Seri Mohd Shafie Apdal (Warisan-Semporna) had asked for the total petroleum subsidy expenditure as of September and a ministry-by-ministry breakdown of spending cuts introduced to accommodate the rising subsidy burden.
However, the written reply did not provide a cumulative subsidy figure up to September or specify the spending reductions undertaken by individual ministries.
Instead, the ministry said the government had reprioritised its annual expenditure to focus on programmes that would deliver the greatest benefits to the public and the economy.
"(This takes) into account the operational requirements and priorities of each ministry, particularly to ensure that high-impact programmes and essential services such as education, healthcare and assistance to the people remain protected," it said.
The ministry added that the government would continue balancing the need to shield Malaysians from higher fuel prices with prudent expenditure management to ensure that the growing subsidy burden did not undermine fiscal sustainability.
