KUALA LUMPUR (Reuters) - Malaysian Prime Minister Muhyiddin Yassin’s ruling coalition won a key state election on Saturday, in a vote that was widely seen as a referendum on his seven-month-old administration. The victory in Sabah state in Borneo is likely to strengthen Muhyiddin’s position as he faces a leadership challenge from opposition leader Anwar Ibrahim, who said this week he had the parliamentary majority needed to oust the premier. Muhyiddin’s Perikatan Nasional (PN) coalition and its allies won 38 of the 73 seats up for grabs in Saturday’s election, narrowly taking control of the previously opposition-held state. Muhyiddin said earlier that victory in Sabah could pave the way for early national elections aimed at ending uncertainty over the stability of his ruling alliance, which has a two-seat majority in parliament. Muhyiddin came to power in March after forming an alliance with opposition parties following the shock resignation of his predecessor, Mahathir Mohamad. Muhyiddin’s opponents have accused him of stealing power by shifting alliances instead of at the ballot box, and his allies have been pressuring him for months to call snap national polls to secure a strong mandate. “He will use the victory to dismiss any challenge to federal leadership. Muhyiddin can now confidently lead a federal coalition in a general election,” said Adib Zalkapli, a director with political risk consultancy BowerGroupAsia. On Wednesday, Anwar declared that he had secured a “formidable” majority to claim the premiership - something Muhyiddin dismissed as a “mere allegation”. The power struggle comes as the Malaysian economy reels from the impact of the coronavirus pandemic. Muhyiddin has announced a stimulus package of 305 billion ringgit ($73.16 billion), including additional measures announced just three days ahead of the Sabah polls.