Finance Minister Lim Guan Eng says the government's fiscal consolidation is on track as it targets to reduce the deficit from 3.7% of GDP in 2018 to below 3% by 2021.
KUALA LUMPUR: Finance Minister Lim Guan Eng says the government's fiscal consolidation is on track as it targets to reduce the deficit from 3.7% of GDP in 2018 to below 3% by 2021.
Speaking at the Budget 2020 consuldation at the Ministry of Finance in Putrajaya on Thursday, he said under the fiscal consolidation, the government is cutting the fiscal deficit gradually to 3.4% this year and 3.0% in 2020.
“By 2021, we should be able to cut it below 3.0%. The consolidation is necessary to preserve our high credit ratings of A3/A-.
“Nevertheless, Malaysia places a premium on economic growth, and the consolidation is proceeding without sacrificing the wellbeing of the rakyat,” he said.
Lim said as Malaysia pursues economic growth, the government must be always be mindful of its quality.
Guided by the principles of Competency, Accountability and Transparency (CAT), the government will be fulling converting to accrual-based accounting from cash-based accounting by 2021.
“This will ensure a more transparent disclosure of our debt and liabilities, as well as the value of our assets,” he said.
Lim said the switch to accrual accounting allowed the government to have a wholesome consolidated view of the government debt and liabilities.
“We have been making good progress at managing it. From 79.3% of GDP in 2017, the level of the government debt and liabilities has decreased to 75.4% of GDP in 2018.
“The reduction was possible due tighter control over expenditure on various projects as well as due to our expanding economy,” he said.
Lim said the government would like to spend more but at the end of the day, legacy issues are like 1MDB are still something it had to deal with.
No country can lose RM150bil without being hurt from it, he said.
He said other reform initiatives such as the introduction of Fiscal Responsibility Act (FRA) and the Government Procurement Act (GPA) will further enhance credibility and accountability of public finances.
In addition, the government has established the Debt Management Office to pro-actively manage the overall government debt and liabilities as well as undertake comprehensive assessment and reporting of fiscal risks exposure.
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