SHAH ALAM - Malaysia’s fuel subsidy expenditure is projected to reach nearly RM40 billion this year, significantly exceeding the RM15 billion allocated under Budget 2026, as the government continues absorbing higher global energy costs to keep domestic fuel prices affordable while maintaining targeted fuel subsidies for eligible groups.
Prime Minister Datuk Seri Anwar Ibrahim, who is also Finance Minister, said subsidy spending rose sharply after the first two months of the year due to escalating global crude oil prices.
In a written parliamentary reply to Salamiah Nor (PN-Temerloh), he said the government spent RM1.6 billion on RON95 petrol and diesel subsidies in January and February.
However, monthly subsidy costs increased substantially to about RM5 billion in both March and April following the surge in global crude oil prices.
“If the current market price of crude oil remains, the government is expected to spend close to RM40 billion to subsidise petroleum products for 2026,” he said.
The projected expenditure is more than double the RM15 billion initially allocated for fuel subsidies under Budget 2026, highlighting the growing fiscal burden of maintaining subsidised fuel prices amid continued volatility in global energy markets.
Despite the increased costs, Anwar said the government remains committed to ensuring that eligible Malaysians continue to benefit from targeted fuel assistance.
He said qualified recipients under the BUDI95 programme are able to purchase RON95 petrol at the subsidised price of RM1.99 per litre.
Meanwhile, diesel for fishermen continues to be subsidised at RM1.65 per litre, while eligible beneficiaries under the BUDI Diesel programme receive diesel at RM2.10 per litre.
Separately, Anwar said the subsidised petrol control system maintains the retail price of RON95 at RM2.05 per litre, while diesel under the subsidised diesel control system is sold at RM2.15 per litre.
Addressing concerns over energy security, the Prime Minister said Malaysia’s petroleum supply remains stable despite the prolonged global energy crisis.
“The nation’s supply of petroleum remains stable and sufficient. The Madani government will continue strengthening our measures to ensure our long-term supply and maintain the targeted subsidies, even as the global crisis prolongs.
“The government’s priority is ensuring that the people are protected, especially those most vulnerable to cost pressures, while closely monitoring our fiscal position and capability to continue the subsidies,” he added.
His remarks come as governments worldwide continue to grapple with elevated energy prices and geopolitical uncertainties that have contributed to sustained volatility in global oil markets.
Malaysia has maintained its targeted subsidy approach to balance the need to protect lower-income groups from rising living costs while managing the increasing fiscal pressures associated with subsidising fuel.