In a directive issued today, finance ministry secretary-general Johan Mahmood Merican said the National Budget Office had been asked to review the remaining estimated expenditures under the 2026 budget.

Johan said the approved 2026 budget only allocated RM15 billion for subsidies, a massive reduction from previous years given that fuel subsidies alone reached RM38 billion in 2023.

However, he said Putrajaya’s total subsidy bill was now expected to balloon to RM58.4 billion for the whole year, due to the chain reaction triggered by the Iran war and the ensuing global energy crisis.

He said all ministries, departments, and agencies were to review their remaining operational expenditures for the year in order to save costs.

The proposed cuts include salaries and allowances for unfilled vacancies, a 10% reduction on services, supplies and assets, as well as a 20% cut on budgets for federal statutory bodies and companies limited by guarantees.

All ministries, departments, and agencies have been given until May 15 to submit their proposed budget reviews to the National Budget Office.

“As you are aware, the geopolitical situation caused by the war in West Asia has resulted in restrictions in the Strait of Hormuz, which triggered an acute spike in the price of crude oil.

“This external factor has increased logistical costs, which has a direct impact on the cost of living for Malaysians,” he said in the directive.

FMT has reached out to the finance ministry for comment.