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MUFG sees Malaysia’s fiscal reforms cushioning ringgit against oil shock

MUFG points to RM15.5 billion in annual subsidy savings to help offset higher energy costs in Malaysia’s Budget 2027 outlook.

Reported · Written up by our desk · Central Banks

MUFG’s Lloyd Chan previewed Malaysia’s Budget 2027, arguing that earlier fiscal reforms and subsidy rationalization give Malaysia a buffer if oil prices rise, supporting confidence in Malaysian Government Securities and the ringgit, according to FXStreet.

The note says stronger revenues and RM15.5 billion of annual subsidy savings should help cushion higher energy costs, allowing fiscal consolidation to slow rather than reverse even amid global volatility.

MUFG also said Budget 2027 should stay fiscally disciplined, shifting from new reforms toward execution, with a revenue strategy focused on stronger tax collection and SST broadening rather than another major tax overhaul.

On spending, MUFG said consolidation should rely more on better targeting and efficiency than broad austerity, while household relief should remain targeted through BUDI MADANI rather than a return to blanket subsidies.

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