Malaysia: Implementing a Medium-term Expenditure Framework

This technical assistance provided guidance to implement a Medium-Term Expenditure Framework (MTEF) in Malaysia anchored in the 2023 Public Finance and Fiscal Responsibility Act, which represented progress in establishing fiscal rules supported by a medium-term fiscal perspective. Key challenges for integrating medium-term budgeting include publication of year-by-year fiscal projections to guide multi-year expenditure ceilings preparation, preparing multi-year baseline estimates, budget fragmentation, and improving coordination. The report recommends a phased MTEF rollout, with pilot ministries, strengthening the Medium-Term Fiscal Framework (MTFF), upgrading public financial management systems, and introducing a strategic budget phase supported by enhanced institutional arrangements. These reforms target fiscal discipline under the fiscal rules’ framework, transparency, and public expenditure efficiency.