Budget 2026 Cushions The Poor Squeezes The Middle

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Prime Minister Anwar Ibrahim’s Budget 2026, worth RM419.2 billion, is smaller than last year’s but is packed with handouts and cost-of-living measures.
It’s a budget that should keep everyone’s head above water during tough economic times, but in the end, many ordinary Malaysians feel as if they are merely treading water, instead of moving forward.
The usual questions accompanied the unveiling of the budget. “What’s in it for me?”, “Will I get anything out of it?”, “Will the poor get poorer, and the rich richer?”, “How will the middle class fare?”, “How will subsidies and food poverty levels affect me?”.
Malaysia’s 1.6 million civil servants are almost always treated differently from the remaining 31 million population. How could Anwar forget? He, more than anyone else, understands the need to secure the cooperation of the civil servants.
Kai Ostwald, director of the University of British Columbia’s Institute of Asian Research, once said that the key to the success of Anwar’s government is to maintain a positive relationship with the Malaysian civil service.
Most Malaysians will be blunt and say that what Anwar fears most is sabotage by the civil servants, but Ostwald adopts a more measured tone.
Prime Minister Anwar Ibrahim at a civil servants meeting, March 2023Reflecting on the experience of the 2018-2020 Pakatan Harapan government, he said:
“Pockets of the civil service, uncomfortable with Harapan’s perceived progressive leanings and unaccustomed to taking orders from a non-Umno government, were unresponsive to ministerial orders or outright obstructionist.
“That impeded Harapan’s ability to deliver on its agenda and eventually compounded the political crisis that led to its collapse.”
Success means Anwar must look after the welfare of the civil servants. It is the millstone around his neck. Not just him, but anyone sitting in the prime minister’s seat.
Stability first, reform later
Many economists call Budget 2026 a “maintenance budget”, which plays it safe and focuses on sustaining existing programmes and services, but without bold reforms or new initiatives.
Finance Minister II, Amir Hamzah Azizan, said that Budget 2026, which prioritises stability, also aims to “protect households from today’s pressures while laying the foundations for tomorrow’s growth”.
The “maintenance culture” approach is seen in the Operating Expenditure, with RM338.2 billion allocated for operating expenses, a 1.8 percent increase from the previous year.
Significant portions are directed towards public service salaries (emoluments), debt servicing, and pension payouts. This budget is “locked in” to existing obligations.
Finance Minister II, Amir Hamzah AzizanTo further illustrate the budget’s “maintenance culture”, a RM2.5 billion allocation is to maintain federal roads, install street lights, and road furniture. RM5.6 billion has also been allocated for the maintenance of state roads nationwide, and another RM30 million will be used to expedite minor repairs at the district level.
With its main focus on navigating present challenges, Budget 2026 will prepare the country for future growth. Another way is to describe the budget as one concerned with stability, rather than dramatic reform.
Vulnerable groups like the poorest households (B40) will receive more targeted help, in the form of the Rahmah Cash Aid (STR) and Sara Food Aid, with free education thrown in.
Allocations for education, healthcare, and technical and vocational education and training in Malaysia have also been increased. Civil servants and retirees will receive small one-off payments - RM500 and RM250 respectively.
Top priorities are in healthcare and education, with allocations of RM46.5 billion and RM66.2 billion, respectively. The “maintenance budget” promises to upgrade public health infrastructure for medical facilities, including access to affordable healthcare.
An allocation of RM1.2 billion will be for maintenance and repair of hospitals and clinics across the country, alongside a further RM755 million for upgrading or replacing outdated medical equipment.
Continuing with this “maintenance budget” 2026, a RM2 billion allocation is to upgrade over 520 dilapidated schools, primarily in Sabah and Sarawak, and at the same time, repair and maintain various types of schools, including student facilities and teachers’ rooms.
Caution limits bold economic fixes
A prolific coffee-shop commentator who welcomed the absence of major infrastructure and development projects said, “We do not have the spare cash to keep on building and building, especially those white elephant projects, because half the time, we don’t know in whose pocket the money goes.”
Malaysians in the private sector are unhappy. The B40 are given handouts, and with fuel, electricity, and certain food products projected to cost more, once universal subsidies are removed, the middle class will be squeezed further with inflation and stagnant wages.
Civil servants, retirees, and veterans are well provided for, as is another group of people who will never lose out - the MPs with their guaranteed pensions.
Not everyone has a pension, and it is concerning that Budget 2026 did not address the pension issue and the EPF.
The pandemic saw millions of Malaysians withdrawing from their EPF retirement savings and are now left with dangerously low balances. This potentially looming crisis should have been addressed in Budget 2026.
Although Petronas continues to play a crucial role as a financial lifeline for the government, there is also a limit as to how much revenue the oil giant can provide, with global oil prices as it is. This may explain the government’s caution about overspending.
In short, Budget 2026 protects the poor, squeezes the middle class, while the rich remain relatively untouched. Major projects are on hold, small allocations are for AI, green energy, and film incentives, but on the whole, the government wants to keep the fiscal ship steady enough to weather potential storms. - Mkini
MARIAM MOKHTAR is a defender of the truth, the admiral-general of the Green Bean Army, and the president of the Perak Liberation Organisation (PLO). Blog, X.
The views expressed here are those of the author/contributor and do not necessarily represent the views of MMKtT.

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