Anwar, who is also finance minister, is expected to prioritize cash handouts to middle-income groups, more tax relief, and support for the semiconductor and renewable-energy sectors, while strengthening revenue through tax-compliance measures rather than new levies, economists said. RHB’s Alexander Chia called it a tightrope: the looming general election raises expectations for a feel-good budget, but public finances are tight.
The election is not due until February 2028, yet growing tensions inside Anwar’s ruling alliance have fuelled expectations of an early vote — Anwar said in May he may call snap polls if internal divisions widen. The 79-year-old premier’s Pakatan Harapan coalition has suffered a string of state-election setbacks, and he restored subsidized fuel quotas in August in a move benefiting 16 million people.
The fiscal math is under pressure. OCBC economist Lavanya Venkateswaran expects the 2026 deficit to land at 3.6 percent of GDP against a 3.5 percent target, as the fuel-subsidy bill could reach RM40 billion ($9.79 billion) against a RM15 billion provision after the US-Israel war with Iran spiked oil prices. Anwar has also hinted at a bigger defence allocation — up more than 35 percent over three years already — and a special youth allocation, while telling ministries to find savings elsewhere.