Structural burdens like debt servicing, subsidies, and pension obligations remain politically unspoken — yet they quietly shape Malaysia’s fiscal future and constrain the promises made in each annual budget
By Dr Mohd Safar Hasim
Every year, Malaysia’s national budget is tabled with the same choreography: a confident finance minister, a cascade of allocations, and a flurry of headlines celebrating cash aid, infrastructure, and education.
But behind the applause lies a persistent silence — ne that grows heavier with each passing year.
That silence is the invisible elephant in the room: the structural burdens that quietly shape our fiscal future but are rarely addressed with the clarity they demand.
These are not abstract concerns. They are real, measurable, and mounting. Yet they remain politically inconvenient to name, let alone confront.
A Decades-Long Pattern of Avoidance
Malaysia’s fiscal history is marked by a pattern of deferred reckoning. Each decade has introduced a new form of structural weight — subsidies, guarantees, debt, pensions—none of which have been meaningfully resolved. Instead, they are passed from one administration to the next, growing in size and complexity.
In the 1990s, subsidies were expanded in the wake of the Asian Financial Crisis. What began as temporary relief became a permanent fixture. Fuel and food subsidies, while politically popular, distorted market behaviour and consumed a growing share of operating expenditure.
In the 2000s, the government leaned heavily on mega-projects and public-private partnerships. These were often backed by government guarantees, creating contingent liabilities that did not appear in the official budget but posed real fiscal risks. The public saw new highways and towers; the Treasury saw ballooning obligations.
In the 2010s, debt servicing emerged as a dominant concern. As federal debt rose, so did interest payments. Debt service charges became one of the fastest-growing components of operating expenditure, crowding out spending on health, education, and development. The 1MDB scandal further exposed the dangers of opaque borrowing and weak oversight.
In the 2020s, the COVID-19 pandemic forced unprecedented borrowing. Emergency stimulus packages were necessary, but they added to long-term obligations. At the same time, civil service pensions — a non-contributory scheme — continued to expand. With no structural reform, pension costs became a growing fiscal pressure.
Each of these burdens was significant. Each was politically sensitive. And each, in its time, was treated as secondary to the more visible elements of the budget.
The 2026 Budget: Familiar Promises, Familiar Silences
The recently tabled RM419.2 billion Budget 2026 follows a familiar script. It highlights education (RM64.1 billion), civil service bonuses, and infrastructure investments. It promises targeted cash aid, digitalisation, and green growth.
But the invisible elephant remains. Several, in fact.
* Debt service charges continue to rise. They now consume a significant portion of operating expenditure. Yet the budget speech offers little detail on how this trend will be reversed.
* Subsidy rationalisation is mentioned, but only in passing. The government speaks of targeted subsidies and improved delivery mechanisms, but the timeline is vague. Political hesitation continues to delay meaningful reform, even as subsidies distort fiscal priorities and market behaviour.
* Pension obligations expand quietly. The civil service pension scheme remains unreformed, despite its growing cost. With no contributory mechanism and limited transparency, it represents a long-term liability that future budgets will struggle to absorb.
These are not minor details. They are central to Malaysia’s fiscal sustainability. Yet they are treated as background noise, overshadowed by more politically palatable announcements.
Why the Elephant Must Be Named
The refusal to confront these structural burdens undermines fiscal credibility. It creates a disconnect between public perception and fiscal reality. Citizens are presented with a budget that appears generous and forward-looking, but the long-term costs are obscured.
This distortion has consequences. It limits the government’s ability to invest in long-term development. It forces short-term decisions that may not serve the national interest. And it erodes public trust in the budget process itself.
Transparency is not just a technical requirement. It is a democratic imperative. Malaysians have the right to understand the full picture — not just what is allocated, but what is owed, what is deferred, and what is at risk.
What Responsible Governance Requires
Addressing the invisible elephant requires more than acknowledgment. It demands structural reform, political courage, and institutional transparency.
* Subsidy reform must be accelerated. Blanket subsidies should be replaced with targeted assistance, delivered through efficient mechanisms. This not only reduces fiscal pressure but ensures that aid reaches those who need it most.
* Debt management must be strengthened. Borrowing should be guided by clear principles, with transparent reporting of contingent liabilities and off-budget commitments. Oversight mechanisms must be empowered to monitor and evaluate fiscal risks.
* Pension reform must be initiated. A contributory scheme, with actuarial planning and public disclosure, is essential to ensure long-term sustainability. This is not a call for austerity, but for fairness and foresight.
* Public engagement must be deepened. Budget documents should be accessible, comprehensible, and accompanied by civic education. Citizens must be empowered to ask questions, demand clarity, and hold policymakers accountable.
A Budget Is More Than a Speech
A national budget is not just a ledger of spending. It is a reflection of priorities, values, and political will. It tells us not only what a government wants to do, but what it is willing to ignore.
The invisible elephant in Malaysia’s budget is not a mystery. It is a set of known, measurable obligations that have been deferred for too long. Each year that passes without reform makes the burden heavier. Each silence makes the reckoning more difficult.
To build a resilient economy, we must confront these burdens directly. We must move beyond the optics of generosity and embrace the discipline of sustainability.
We must ensure that every ringgit spent is not just politically convenient, but economically sound.
Until we do, our budgets will remain incomplete —generous in appearance, but fragile in substance.
The views expressed here are entirely those of Dr Mohd Safar Hasim, a Council Member of the Malaysian Press Institute (MPI)