THE change in the title of what is traditionally known as the Economic Report to Economic Outlook 2019 reflects the contents of the new-look document from the Treasury that sums up the state of the Malaysian economy.
Conspicuously missing from Economic Outlook 2019 was the chapter on public finance, which is the most important part of the report. The chapter details everything that everyone needs to know about federal government revenue, where the money goes and how much debt it carries in its books. (The section on public finance was distributed on the morning of Budget Day, a change from the past when it was part of the Economic Report. The report titled Fiscal Outlook and Federal Government Estimates 2019 was nevertheless comprehensive and had all the information that otherwise would have been in the Economic Report.)
Without the chapter on public finance, the contents of Economic Outlook 2019 kept closely to the title. It was full of economic numbers and data.
There were 11 special topics ranging from an ageing Malaysian population to the challenges arising from disruptive technology.
In a nutshell, Economic Outlook 2019 was a little dull, offering few surprises.
In the past, the section on public finance provided the excitement. It essentially detailed how much the federal government would collect in direct and non-direct taxes, dividends from Petronas and income from licensing fees.
The bulk of the direct taxes were the corporate and personal income taxes. The main components of the non-direct taxes were the collections from the goods and services tax (GST) and excise duties.
This year, another item, the sales and service tax, has been added to the list of non-direct taxes.
The chapter also shows where the money is being spent; how much of the government revenue goes towards its operating expenditure and the amount that has been set aside for development expenditure.
Details such as the emolument bill of the civil servants, subsidies and debt service charges are found in the chapter. The discussion on operating expenditure tends to expand on which sectors benefit from government spending.
Based on what the government tends to collect and how much it spends, the shortfall of the federal government, or better known as the fiscal deficit, is disclosed. For strategists and economists, the fiscal deficit is a number that they keep a close watch on where public finance is concerned.
The fiscal deficit is also a vital nugget of information for rating agencies.
In October last year, under the previous government, the fiscal deficit was estimated at 2.8%. In June this year, Finance Minister Lim Guan Eng said that he expected the fiscal deficit to remain at the same level, even though there were concerns that the new administration would face challenges in keeping a lid on the budget because the GST had been abolished.
Apart from the GST’s impact on revenue, the government’s subsidy bill would rise to maintain petrol and diesel prices.
The expectations were that the Pakatan Harapan government would aggressively cut the federal government operating expenditure to make up for the shortfall in revenue. However, economists and even senior government officers felt that the cuts wouldn’t happen so fast and would take time.
Hence, the fiscal deficit number that would have been made available in the public finance chapter of the report was something that strategists and economists were eagerly looking out for.
Apart from the details on the state of public finances in Malaysia, the rest of the information in Economic Outlook 2019 is quite similar to the previous years.
The only difference is the way it is presented.
For instance, in previous years, the Economic Report had three pages of key economic data and forecasts of the economy. It was a snap-shot of how the economy was expected to perform the following year and in comparison to the previous two years.
Among the key data in the numbers is the growth of the economy, otherwise known as the gross domestic product (GDP), public and private-sector spending, federal government finances and the circulation of money in the system.
While all the information is in Economic Outlook 2019, it is in different sections.
Economic Outlook 2019 is different compared to previous economic reports of the Treasury. It is truly a 141-page report on the state of the economy only.