MALAYSIA’s monthly petroleum subsidy bill eased to about RM3bil between June and August this year, down from a peak of nearly RM5bil in March and April, although total fuel subsidy expenditure is still projected to reach RM40bil in 2026.
The Finance Ministry said the moderation followed a sharp rise in global crude oil prices amid the conflict in the Middle East, which had placed considerable pressure on government finances.
“The government has faced significant fiscal pressure from the global supply crisis, which has led to higher subsidy expenditure, particularly for fuel and utilities.
“The conflict 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.
It said monthly subsidies for petrol, diesel and liquefied petroleum gas surged to nearly RM5bil in March and April, up from about RM800mil in January and February.
“The government’s subsidy burden has since 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.”
The ministry was responding to Semporna MP Datuk Seri Mohd Shafie Apdal, who had asked for total petroleum subsidy expenditure up to 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 made by individual ministries.
Instead, the ministry said the government had reprioritised annual expenditure to focus on programmes delivering the greatest benefits to the public and the economy.
“The reprioritisation of expenditure 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 added that efforts to strengthen fiscal discipline included tighter controls on operating expenditure, improving public spending efficiency and reducing leakages in programmes and subsidies.
“Enforcement activities have also been intensified to ensure that government assistance and subsidies are channelled to those who are genuinely eligible, thereby optimising the use of the country’s financial resources,” it said.
The ministry said the government would continue protecting Malaysians from rising fuel prices while managing public spending prudently to ensure the growing subsidy bill remained fiscally sustainable.
