Malaysia could miss its 2026 fiscal deficit target due to rising fuel subsidy costs triggered by the Iran-Israel conflict, according to a Wednesday Bloomberg News report.
In an interview with Bloomberg TV, Second Finance Minister Amir Hamzah Azizan said the government may "slightly" miss the goal, but stressed that protecting vulnerable households remains the immediate priority. He added that longer-term consolidation plans are still on track.
Fuel subsidies have surged as global energy disruptions hit domestic costs, though the government has kept RON95 petrol prices unchanged at heavily subsidized levels. Inflation rose to 1.9% in April, while subsidy spending eased to 3.5 billion ringgit in May after spiking to 7.5 billion ringgit in April.
Despite near-term pressures, Malaysia is maintaining its medium-term fiscal aim of reducing the deficit below 3% of GDP by 2028, from 5.5% in 2022, the report said.
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