Budget 2024: Building on fiscal discipline, RM390 bln in expenditure allocation

09 Oct 2023 12:34pm
Image for illustrative purposes only. - BERNAMA
Image for illustrative purposes only. - BERNAMA

KUALA LUMPUR - Budget 2024 is expected to build on the foundation of fiscal discipline as laid down by the Malaysia Madani Budget 2023, with the aim to provide a more precise roadmap for fiscal reforms and the nation's financial landscape, said Public Investment Bank Bhd.

In a research note, the investment bank said it believed that the budget would prioritise strengthening the middle class and micro, small and medium enterprises (MSMEs) to alleviate the burden imposed by the rising cost of living.

It said Budget 2024 would align with medium- to long-term policies such as the Madani Economy, the 12th Malaysia Plan Mid-Term Review (12MP MTR), the New Industrial Master Plan (NIMP 2030) and the National Energy Transition Roadmap (NETR).

"Our prognosis envisions a budget deficit for the upcoming year at approximately 4.4 per cent of gross domestic product (GDP), aligning with a path leading to the 2025 target of 3-3.5 per cent of GDP as delineated in the 12MP MTR.

"Furthermore, it is worth noting that the Madani Economy initiative has set its sights on maintaining a budget deficit below 3.0 per cent of GDP in the long-term,” it said.

In the re-tabled Budget 2023, the government recalibrated its fiscal deficit target, reducing it from 5.5 per cent to 5.0 per cent.

The government's official budget deficit in the first half of 2023 (1H 2023) amounted to RM39.4 billion, or 42 per cent of the full-year official budget deficit projection of RM93.9 billion, as outlined in the re-tabled Budget 2023 on Feb 24, 2023.

The 1H 2023 budget deficit, stood at 4.5 per cent of GDP versus a full-year target of 5.0 per cent.

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The research house expects the government to allocate RM90 billion for development expenditure and RM300 billion for operating expenditure amid a broader implementation of targeted subsidies, particularly for electricity tariffs and petrol subsidies.

The government may introduce cash transfers or bolster financial aid to mitigate the financial repercussions for groups affected by the subsidy reduction, it said.

The research house anticipates Budget 2024 to be positive on the construction sector with the continuation of major infrastructure projects and the initiation of new ones.

The significant initiatives include the Bayan Lepas Light Rapid Transit (BLLRT), airport expansions in Penang and Subang, Sabah’s new airport in Kimanis, which is expected to commence operations by 2030, Mass Rapid Transit 3 (MRT3) project, the East Coast Rail Link (ECRL) and the final phase of the Pan Borneo Highway. - BERNAMA