Fiscal deficit up to RM40.1b, budget deficit stays at 2.8% of GDP: Guan Eng

PUTRAJAYA: Malaysia's fiscal deficit is projected to increase to RM40.1 billion from RM39.8 billion, thus maintaining a budget deficit of 2.8% of gross domestic product (GDP) for 2018, according to Finance Minister Lim Guan Eng.
He said the Pakatan Harapan government led by Prime Minister Tun Dr Mahathir Mohamad was committed to delivering its key manifesto goals and promises to ease the burden of the people, and to this end, had announced three measures.
"The measures are the zero-rating of the Goods and Services Tax beginning June 1 and re-introducing the Sales and Services Tax (SST) on September 1 this year. This will 'return' approximately RM17 billion back to ordinary Malaysians for the rest of the year," he told a press conference, here today.
Lim said the government had also announced the stabilisation of the price of RON95 at RM2.20 per litre and diesel at RM2.18 per litre, providing savings of RM3 billion to Malaysians.
A RM700 million Hari Raya special assistance to civil servants (Grade 41 and below) and pensioners was also announced by the Finance Minister today.
Lim noted that these three measures amounting to RM20.7 billion would provide a significant boost to consumer spending in Malaysia and lead to improved consumer optimism and business profits.
"At the same time, we are mindful that the Federal government debt, which has exceeded RM1 trillion, requires fiscal discipline to be maintained to ensure sustainable expenditure," he said.
The finance minister also said as part of the reallocation of expenditure priorities, the government would review, defer and renegotiate at least RM10 billion worth of identified high-priced projects and this would result in achieving additional revenue.
Among the additional revenues are an estimated RM5.4 billion from the rise in the price of oil from the US$52 per barrel used in the 2018 budget to the current price of US$70 per barrel.
This additional revenue, he said, would come from the additional corporate and petroleum income taxes from the oil companies operating in Malaysia.
Additionally, an estimated RM5 billion in revenue would come from higher dividends from government-linked companies such as Khazanah, Bank Negara Malaysia and Petronas.
"The implementation of the SST in September will provide the country with a projected RM4 billion in revenue.
"This conservative estimate is due to fact that the SST revenues will only be fully realised from November onwards, taking into account the bi-monthly tax collection mechanism for local manufacturers," he added. — Bernama