English
Malaysia: Fiscal deficit of 3.2% of GDP projected
KUALA LUMPUR: Standard Chartered Global Research projects a 2020 fiscal deficit of 3.2% of gross domestic product, above the government’s target to narrow the deficit to 3% from 3.4% in 2019.
Citing a weaker growth outlook, it added that this should not come as a surprise as the government has hinted at a more gradual fiscal consolidation path.
“We do not expect this to raise rating concerns given the challenging economic outlook, as long as the medium-term fiscal consolidation target is adhered to, ” it pointed out.In the tabling of the budget, the government is expected to focus on rationalising expenditure such as tax incentives and tightening the administration of revenue collection.
“Excluding the one-off GST and income tax refunds of 3.5% of GDP, operating expenditure declined in H1-2019, reflecting the government’s commitment to expenditure rationalisation thus far.
“Development expenditure also remained stable at 3.2% of GDP in H1-2019, ” said Standard Chartered.
There is unlikely to be a significant fiscal stimulus package as growth in Malaysia remains resilient and non-oil-related revenue has decreased following the transition from the Goods and Services Tax to the Sales and Service Tax, it said.
It also noted that the government has said there are no plans for new tax measures in the upcoming budget.
Source: https://www.thestar.com.my/business/business-news/2019/10/10/fiscal-deficit-of-32-of-gdp-projected#RxhcveV7UZTutVOF.99