Federal govt revenue expected at Rm244bil
THE federal government revenue is expected to register at Rm244.5bil, or 15.2% of GDP, in 2020. The collection of tax revenue is higher at Rm189.9bil, while non-tax revenue is seen at Rm54.6bil. Total expenditure is forecast at Rm297bil, or 18.4% of GDP, of which operating expenditure (OE) is estimated at Rm241bil and development expenditure (DE) at Rm56bil.
While fiscal policy continues to support economic growth and maintain the resilience of the economy, the overnment remains committed towards fiscal consolidation efforts to strengthen the country’s financial position.
The 2020 deficit target of 3.2% of GDP is slightly higher than the 3% originally announced in Budget 2019, but remains on a consolidation path.
The government will allocate an additional injection of 0.2% of GDP through DE to revitalise public investment via capital formation in strengthening long-term potential of the economy.
The allocation will be mainly channelled to accelerate the implementation of the impactful projects such as the Pan Borneo Highway, Mass Rapid Transit 2 and Gemas-johor Bahru Electrified Double Track Project.
Small-scale project will also be implemented such as upgrading of dilapidated schools, clinics, treatment plant and sewage facilities as well as suburban broadband infrastructure.
In addition, allocation is provided for implementation of the rationalisation plan of Federal Land Development Authority (Felda) and Lembaga Tabung Haji as well as higher debt servicing commitment for SRC International Sdn Bhd.
The government will also focus on programmes which will create more employment opportunities and income generation, thus improving the well-being of the people.
Given the pre-emptive measures, the overall deficit in 2020 is expected to be lower at 3.2% of GDP (2019:3.4%), with fiscal consolidation remaining on its trajectory and the debt position at a manageable level.
In 2019, revenue performance is expected to remain favourable amid global economic challenges. The revised total revenue is expected in increase Rm1.5bil to Rm263.3bil compared to the original estimates, constituting 17.4% of GDP.
Tax revenue is expected to rise 3.4% to Rm180bil, or 11.9% of GDP due to higher collection of sales tax and service tax, while non-tax revenue is projected is projected at Rm83.3bil, or 5.5% of GDP.
Total expenditure is expected to increase Rm1.4bil to Rm316bil or 20.8% if GDP as compared to the budget estimates. OE is estimated to expand by Rm2.4bil to Rm262.3bil, or 17.3% of GDP, mainly due to higher fuel subsidies. Overall, the federal government’s fiscal deficit in 2019 is expected to remain at 3.4% of GDP as originally targeted in the Budget 2019. Consequently, excluding debt service charges, the primary balance is expected to record a lower deficit of 1.2% of GDP.