PUTRAJAYA — The capitation grant distributed to state governments will increase by 25%, or RM109 million, to RM548 million from 2026.
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 is the first time the capitation grant rate has been reviewed since 2002. The review reflects the Madani government’s commitment to supporting 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 (EFT) guidelines. Anwar said the government’s focus on environmental conservation is reflected in the increase in EFT allocations, from RM150 million in 2023 to RM200 million in 2024, and further to RM250 million this year.
“Through the National Finance Council, the government reaffirms its commitment to working with and supporting all state governments towards the development of Malaysia,” he said.
Anwar noted that federal government grants to state governments totalled RM9.3 billion in 2024 and will rise to RM9.8 billion this year to benefit all Malaysians.
Additionally, the federal government will implement an inclusive development approach, aligning new projects approved in Budget 2025 with the priorities of each state government. The allocation for agricultural programmes in collaboration with state governments has also doubled from RM150 million in 2024 to RM300 million this year.
The National Finance Council meeting, held annually, serves as a platform for financial discussions between federal and state governments.
Today’s meeting was attended by both Deputy Prime Ministers, Datuk Seri Ahmad Zahid Hamidi and Datuk Seri Fadillah Yusof, alongside senior federal and state officials.
Among those present were Sarawak Premier Tan Sri Abang Johari Tun Openg and Sabah Finance Minister Datuk Seri Masidi Manjun, representing Chief Minister Datuk Seri Hajiji Noor.
Also in attendance were Selangor Menteri Besar Datuk 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. — March 6, 2025