KUALA LUMPUR: 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 (US$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.