PUTRAJAYA, March 6 — Effective 2026, the capitation grant distributed to state governments will be increased by 25 per cent, from RM109 million to RM548 million.
Prime Minister Datuk Seri Anwar Ibrahim, who is also the Finance Minister, said the new rate was approved during the 2025 National Finance Council meeting, which he chaired this morning.
“This marks the first time the capitation grant rate has been reviewed since 2002. The review reflects the Madani government's commitment to assisting state governments in delivering services to the people,” he said in a statement today.
The National Finance Council also approved improvements to the Ecological Fiscal Transfer for Biodiversity Conservation’s (EFT) implementation guidelines.
Anwar said the Madani government's focus on preserving and conserving the environment is demonstrated by the rise in the EFT allocation from RM150 million in 2023 to RM200 million in 2024, and further to RM250 million for this year.
“Through the National Finance Council, the Madani government demonstrates its commitment to cooperate with and provide continuous support to all state governments towards the development of Malaysia Madani,” he said.
Federal government grants to state governments amounted to RM9.3 billion in 2024, and this year, RM9.8 billion will be allocated for the benefit of all Malaysians.
Anwar added that this year, the Federal government will implement inclusive development, where newly approved development projects approved in Budget 2025 will be aligned with the priorities of each state government.
The allocation for agricultural programmes in cooperation with the state governments has also been raised to RM300 million for this year, from RM150 million in 2024.
The National Finance Council’s meeting is held annually as a platform for negotiations between the federal and state governments on financial matters.
Deputy Prime Ministers Datuk Seri Ahmad Zahid Hamidi and Datuk Seri Fadillah Yusof, as well as senior Federal and state officials, attended today's meeting.
Among those present were Sarawak Premier Tan Sri Abang Johari Openg and Sabah Finance Minister Datuk Seri Masidi Manjun, who represented Chief Minister Datuk Seri Hajiji Noor.
Also present were Selangor Menteri Besar Dato' Seri Amirudin Shari, Johor Menteri Besar Datuk Onn Hafiz Ghazi, Kedah Menteri Besar Datuk Seri Muhammad Sanusi Md Nor, and Terengganu Menteri Besar Datuk Seri Ahmad Samsuri Mokhtar.
— Bernama
