2017 fiscal deficit target achievable

PETALING JAYA: HSBC Global Research expects Malaysia to meet its 3% of gross domestic product fiscal deficit target but suspects that overly ambitious revenue projections could mean that spending will eventually have to be trimmed.

In a report released yesterday it expects the government to eventually trim development spending instead of operation spending to the longer term detriment of the economy.

“It will be hard to curb operational spending – much has already been promised to the public in terms of larger cash hand-outs via BR1M, and for civil servants,” its economist Lim Su Sian said. The government expects both revenue and expenditure to rise 3.4%, to RM219.7 billion and RM260.8 billion respectively.

Lim also thinks it is too early to determine how Bank Negara Malaysia will respond with regard to monetary policy.