The ministry said the reorganisation of operating expenditure is being carried out in response to global supply challenges and rising subsidy commitments.

“The measure is part of a prudent fiscal approach to optimise government resources so that support for the people can continue to be sustained,” it said in a statement today.

It did not confirm the scale of the proposed cuts, but said guidance had already been issued to ministries and agencies.

The clarification comes after an FMT report that the Treasury had instructed all ministries, departments and agencies to review their spending and submit proposals for budget cuts by May 15.

Significant spending reductions have been proposed for the healthcare and higher education ministries.

The ministry had said in mid-April that fuel subsidies were costing the government about RM7 billion a month, a sharp increase from about RM700 million monthly before geopolitical tensions in the Middle East disrupted global oil supply routes.

Of the RM7 billion monthly subsidy bill, RON95 fuel subsidies have surged from RM300 million to RM4 billion.

Diesel subsidies, including support for farmers, fishermen, and logistics to stabilise food prices, have risen from RM400 million to RM3 billion.