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, 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.