Malaysia targets 3.3% fiscal deficit for 2027
Federal debt is projected at 63.7% of GDP in 2027, while the Treasury says conditions may not favour bringing back GST.
Malaysia aims to bring its fiscal deficit down to 3.3% of gross domestic product (GDP) in 2027, against 5.5% in 2022, according to Treasury secretary general Tan Sri Johan Mahmood Merican. He said fiscal reforms were intended to strengthen public finances and reduce federal debt relative to GDP.
At Deloitte’s 52nd TaxMax conference in Kuala Lumpur on Nov 12, Johan said the federal debt ratio was forecast at 63.7% in 2027. It stood at 65.2% at the end of 2025.
Johan described Budget 2027’s expansionary policy as important for supporting growth, limiting unemployment and lifting incomes as households face living-cost pressures. He said the government continued to prioritise income increases, including through a higher minimum wage.
On reinstating the goods and services tax (GST), Johan said economic uncertainty and the focus on household incomes meant conditions might not be suitable. An equivalent-rate switch from the sales and service tax (SST) would not necessarily lift revenue, he said, and could move some tax costs onto consumers from businesses, including exporters.
Generating additional revenue through GST might require a higher rate, which the government did not currently want, Johan said. He added that SST receipts represented 3.2% of GDP, matching GST’s ratio in 2017.
