Accra:Malaysia is set on a course to lower its fiscal deficit to under three percent of the gross domestic product (GDP) within the next two years. This goal is to be achieved through fiscal consolidation, targeted subsidy reforms, and increased private-sector involvement, according to Finance Minister II Datuk Seri Amir Hamzah Azizan.
According to BERNAMA News Agency, Amir Hamzah highlighted that Malaysia had already decreased its fiscal deficit from 6.4 percent of GDP five years ago to 3.7 percent last year. This progress indicates that the country is well-positioned to achieve its fiscal targets. Speaking at the International Monetary Fund (IMF) High-Level Seminar on Mitigating Sovereign Risks in Market-Access Countries, he emphasized that fiscal consolidation would enhance Malaysia's fiscal space, strengthen its position in international debt markets, and improve its resilience to future challenges.
Amir Hamzah pointed out the necessity of subsidy reforms to ensure efficient use of public funds, directing aid to those most in need. He noted that untargeted subsidies waste significant resources, and identifying the right groups with robust mechanisms is crucial. Savings from these reforms could be redirected towards more productive sectors, with digitalization and improved systems aiding in accurately identifying eligible recipients.
He further explained that Malaysia's economic fundamentals, such as GDP growth above five percent, inflation below two percent, and unemployment around three percent, support its fiscal consolidation efforts. However, he underscored the importance of safeguarding vulnerable groups while sustaining growth and promoting private-sector participation to lessen the dependency on government expenditure.
Investment activity in Malaysia has shown strength, with foreign direct investment (FDI) and domestic investment contributing equally to economic growth. Amir Hamzah also mentioned that Malaysia is focused on enhancing its domestic capital markets to improve financing flexibility, support sustainable growth, and create opportunities for private investors. Maintaining sufficient financial buffers is essential to withstand potential economic and financial shocks.
Amir Hamzah stressed that policy clarity and consistent implementation are vital for maintaining investor confidence and ensuring predictable access to capital markets. Earlier, he led the Malaysian delegation to the 2026 IMF and World Bank Group Annual Meetings at the Queen Sirikit National Convention Centre.