Malaysia will meet deficit target with rationalised expenditure and optimised revenue

PUTRAJAYA: Malaysia will meet its projected budget deficit of 2.8% this year with rationalised expenditure and optimised revenue, said Finance Minister Lim Guan Eng.
"As part of the reallocation of expenditure priorities, the new federal government will review, defer and renegotiate at least RM10 billion worth of identified high-priced projects," he told reporters at a press conference today.
These expenditures include projects that were awarded via direct negotiation or a limited tender exercise, non-essential operating expenditure, big-ticket budget allocations and other items such as special projects under the Internal Coordination Unit.
Lim said the government would save billions of ringgit when these projects are either retendered or scrapped.
In terms of optimised revenue, the ministry expects additional revenue from higher oil price, higher dividends from government-linked companies (GLC) and implementation of the Sales and Services Tax (SST) in September.
The rise in oil price from the US$52 per barrel used in Budget 2018 to the current US$70 (RM279) will result in an estimated RM5.4 billion additional revenue, which will come from corporate and petroleum income taxes.
There will also be an estimated RM5 billion as a result of higher dividends from GLCs while the SST will result in an estimated RM4 billion.
"The projected fiscal deficit will increase from RM39.8 billion to RM40.1 billion, which would maintain the federal government budget deficit at 2.8% of GDP. The government's current balance will also remain positive," Lim said.
Asked whether the ministry will remove the previous government's appointees from GLCs, he said: "I think it is only fit and proper that they do the right thing ... the sooner the better."
On the possibility of listing Petronas, Lim said the proposal has not been put forward to the federal government.
Lim also confirmed that the ministry has made a RM143.75 million payment that was due from 1MDB to Abu Dhabi-based International Petroleum Investment Co on Wednesday.
On whether the Tun Razak Exchange project will continue, Lim said the commitments that have been entered into will be honoured but some of the terms will need to be renegotiated.
On whether the ministry will call for a new budget to replace the previous government's Budget 2018, he said it is possible and likely.
Lim said some measures under Pakatan Harapan's first 100 days promises will only be implemented when the financial situation improves but stressed that it is committed to fulfilling them.