Malaysia's Fiscal Consolidation Targets Under Threat from Soaring Oil Prices

Malaysia's government may face challenges in achieving its fiscal consolidation targets due to rising Brent crude oil prices. The price of Brent has exceeded US$100 per barrel, making it difficult for the government to meet its goal of a 3.5% fiscal deficit target this year. Sunway University economics professor Yeah Kim Leng said that if oil prices remain high, the government may need to revise its oil-price assumption used in preparing Budget 2027.

Budget 2027 is scheduled to be tabled on October 9th. Yeah Kim Leng suggested that an upward revision of the oil-price assumption to US$80 to US$90 per barrel would likely be considered for Budget 2027, given the uncertainty over the Middle East situation.