Petroleum subsidies projected to reach RM40 billion in 2026

THE government projects that petroleum subsidies will reach RM40 billion this year, following a global supply crisis that has pushed world crude oil prices above US$120 per barrel.

The Ministry of Finance stated that expenditure on subsidies for petrol, diesel, and liquefied petroleum gas (LPG) rose from approximately RM800 million per month in January and February to nearly RM5 billion per month in March and April.

However, the subsidy burden moderated to about RM3 billion per month for the period from June to August.

"In addressing this situation, the government has adopted a balanced approach to ensure that the welfare of the people continues to be maintained without compromising the nation's financial sustainability.

"The government has reprioritised annual expenditure by focusing on programs with a high impact on the people and the economy.

"This reprioritisation of expenditure was carried out by taking into account the operational needs and priorities of each ministry, specifically to ensure that high-impact programs and essential services, such as education, healthcare, and public assistance, remain protected," it said in a written response published on the Parliament's website.

This was in reply to a question posed by Datuk Seri Mohd Shafie Apdal (WARISAN-Semporna), who requested the volume of petroleum products for this year (up to September) and a list of expenditure cuts across each ministry to accommodate the increased subsidy costs for the year.

According to the MOF, the government will simultaneously strengthen fiscal discipline by controlling operational expenditure, enhancing the efficiency of public spending, and curbing leakages in the implementation of programs and subsidies.

"Enforcement activities are also being stepped up to ensure that government-provided assistance and subsidies reach those who are truly eligible, thereby optimising the use of the nation's financial resources.

"The government will continue to balance the need to protect the public from rising fuel prices with prudent expenditure management, ensuring that the increase in subsidies can be accommodated without undermining the nation's fiscal sustainability," it added. – October 29, 2026