By Lim Li Lian
Over the years, Putrajaya’s budgets have largely adhered to economic orthodoxy—loosening the purse strings when growth falters and tightening them when the economy hums. Countercyclicality, in other words, is not the problem. The trouble lies deeper: not in what the money is spent on, but rather what is being deprioritised.
In this succinct pre-budget statement, REFSA illustrates the importance of funding Malaysia’s transition on higher-value production and better-paid jobs, as well as raising long-term debt to finance mission-driven strategic investments.
The balancing act is delicate as the government faces the twin pressures of rising debt-service costs and a public-debt ratio nearing 65% of GDP. However, preoccupation with debt reduction alone, misses the forest for the trees. Fiscal sustainability depends as much on growing the denominator—GDP—as on trimming the numerator. With limited fiscal room, Malaysia must invest smarter, not just spend less.
In short, fiscal discipline should not mean fiscal timidity. Budget 2026 offers the chance to build an economy that grows faster, pays better, and owes less—not by cutting ambition, but by financing it wisely.