UPDATE 1-Malaysia treasury orders ministries to cut 2026 budgets over Iran war costs, document shows

‌Malaysia's treasury has ​ordered all government ministries and agencies to cut their operating budgets for 2026 due ‌to the impacts of the Middle East conflict, according to a government directive reviewed by Reuters.

The directive dated Wednesday and sent by Treasury Secretary-General Johan ‌Mahmood Merican said a sharp spike in energy prices stemming ‌from the conflict has had a direct impact on living costs, causing a rise in subsidy needs to be met by the government. The government's public subsidy ⁠bill ​was expected to ⁠reach 58.4 billion ringgit ($14.79 billion) this year, far surpassing the 15 billion ringgit originally ⁠allocated under the 2026 budget, Johan Mahmood said in the internal document.

As ​such, all ministries, departments and agencies were to review their operational ⁠expenditures for the year and submit their proposals for spending cuts by May ⁠15, ​he said. The finance ministry did not immediately respond to a request for comment.

The ministry has said it now costs the ⁠government 7 billion ringgit a month to fund fuel subsidies and other ⁠aid measures, ⁠a 10-fold increase from its spending prior to the outbreak of the conflict in late February. ($1 = 3.9480 ‌ringgit)

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