On October 18, during a parliamentary session, Malaysian Prime Minister and Finance Minister Anwar Ibrahim presented the 2025 fiscal budget. The Malaysian government projects a GDP growth of 4.5% to 5.5% for the coming year, and based on this optimism, has proposed the largest budget in the country’s history.
Anwar forecasts that Malaysia’s GDP will grow by 4.8% to 5.3% this year, with a potential peak of 5.5% next year. The government anticipates total revenue of 339.7 billion ringgit (approximately $78.8 billion), representing a 5.5% increase from the current year, while total expenditure is expected to reach a record high of 421 billion ringgit, an increase of 27.2 billion ringgit from last year. He expressed confidence that this budget will stimulate economic growth in the upcoming year.
According to the budget proposal, Malaysia’s fiscal deficit is projected to be around 3.8% of GDP next year, a decrease from last year’s 4.3%. Currently, the national debt stands at approximately 1.2 trillion ringgit, roughly 63% of GDP. Anwar emphasized the government’s commitment to gradually reducing the deficit through cautious fiscal measures to avoid further national debt escalation.
To achieve deficit reduction, Anwar noted that the government is optimizing spending in next year’s fiscal budget, maintaining and increasing targeted welfare expenditures while refining existing welfare policies. One of the most talked-about changes will involve adjustments to the current subsidy program for RON95 gasoline. The Malaysian government has long subsidized the price of RON95, which is currently about one-third of the price in Thailand and less than one-quarter of that in Singapore. Anwar stated that the adjustments will primarily affect high-income groups and foreigners, while the majority—about 85%—of the population will continue to benefit from low prices. This adjustment aims to cut the government’s annual expenditure on subsidies by approximately 40%, reducing the current spending of around 20 billion ringgit.
Reflecting on the importance of optimizing fiscal spending and subsidy policies, Anwar quoted a line from the Analects of Confucius in Chinese: “To err but not to change is to err indeed,” stressing the need to avoid repeating mistakes. This is not the first time Anwar has drawn on classical Chinese philosophy during budget presentations; last year he referenced Mencius’ concepts of “benevolence,” “righteousness,” “wisdom,” and “propriety.”
