MoF LISTS ‘MITIGATING EFFORTS’
The government outlines a slew of measures to bring the country’s finances back on an even keel. The finance minister says this involves generating income and dealing with the national debt.
HIGH-VALUE PROJECTS WORTH RM10b TO BE REVIEWED, CANCELLED OR RENEGOTIATED FISCAL DEFICIT TO GROW FROM RM39.8b TO RM40.1b, RETAINING BUDGET DEFICIT AT 2.8pc AGAINST GDP AFTER
RM21 GSTbZERO-RATING, ; PROJECTED PETROL REVENUE REVENUE WILL SHRINK IS RM5.4b BY
THE Finance Ministry said Malaysia’s fiscal deficit this year is projected to increase to RM40.1 billion from RM39.8 billion projected earlier, maintaining a budget deficit of 2.8 per cent of gross domestic product (GDP).
Finance Minister Lim Guan Eng said here yesterday that this was despite the government’s revenue being set back by a RM21 billion loss from the zero-rating of the Goods and Services Tax, effective today.
He said the loss would be partially offset by an estimated RM14.4 million income to be generated from certain sources.
They include revenue from the increase in corporate taxes due to higher global oil prices (RM5.4 billion), from the current price of US$70 per barrel compared with US$52 per barrel benchmark used in the 2018 Budget; higher dividends from governmentlinked companies (RM5 billion); and, proceeds from the Sales and Services Tax (RM4 billion).
He said additional revenue would come from more corporate and petroleum income taxes from oil companies operating in Malaysia.
The RM5 billion in revenue from higher GLCs dividends would include payments from Khazanah, Bank Negara Malaysia and Petronas.
Lim said the implementation of the SST in September would provide RM4 billion in revenue.
“This conservative estimate is due to the fact that the SST revenue will only be fully realised from November onwards, taking into account the bimonthly tax collection mechanism for local manufacturers.”
He said the government could save at least RM10 billion from spending cuts on expensive projects, including those awarded via direct negotiations or the limited tender exercise, as well as nonessential operating expenditure.
The government would review, defer and renegotiate at least RM10 billion worth of high-cost projects as part of the reallocation of expenditure priorities.
Lim cited as an example the RM350 million contract awarded for the renovation and rehabilitation of Sultan Abdul Samad Building in Kuala Lumpur.
He said these “mitigating” efforts would cover non-essential operating expenditures, such as professional and consulting services, refurbishments, events and promotional activities, selected information and communications technology systems upgrading and certain big-ticket budget allocations for mega projects, such as the Kuala LumpurSingapore High Speed Rail and the Klang Valley Mass Rapid Transit Line 3.
He said the government would table a supplementary bill for the government’s expenditure and a mini budget during the parliamentary session this month.
He said the supplementary bill would include a RM700 million Hari Raya special assistance to 1.2 million civil servants (Grade 41 and below) and pensioners.
“The Finance Ministry is focused on the government’s fiscal measures, especially on financial steps to be implemented to ensure that the government’s financial position remains robust.
“The measures include reducing the RM1 trillion Federal Government debt caused in part by financial scandals, such as 1MDB (1Malaysia Development Bhd).
“This is also to ensure that our
The Finance Ministry is focused on the government’s fiscal measures, especially on financial steps to be implemented to ensure that the government’s financial position remains robust. LIM GUAN ENG Finance minister
budget deficit remains manageable,” Lim said, adding that tabling a supplementary bill was normal and that Barisan Nasional would have done it as well if it had retained power.
He said despite the fiscal pressures, the fundamentals of the economy remained strong.
“The banking sector is wellcapitalised, with low non-performing loans ratio, and there is sufficient liquidity in the capital markets.”