KUALA LUMPUR: Malaysia is on track to fully restore its fiscal health by 2021 as open competitive tenders and zero-based budgeting have had a positive impact on the government’s finances, Finance Minister Lim Guan Eng says.
He said these measures allowed for development expenditure to increase by 13% or RM2.4 billion for the January-May 2019 period, compared to the same period last year.
“The government is on track to fully restore its fiscal health by 2021. With support from the rakyat, Malaysia has good prospects to overcome the financial legacy issues of high debt load and failed governance left behind by the previous administration,” he said in a statement.
Lim pointed out open competitive tenders and zero-based budgeting have a positive impact on the government’s finances.
In January to May, the government had successfully cut its fiscal deficit by 39% to RM21.4bil, down from a RM35bil deficit a year ago.
“Nevertheless, the government is mindful of its subsidy bill, and will continue to manage its expenses prudently.
“Additionally, the government has shrunk its current account deficit to RM1.1bil in January-May 2019, a reduction of 94% or RM16bil, from a large RM17.1bil deficit in the same period last year,” he said.
He pointed out the successful fiscal consolidation were amongst the reasons for Fitch Ratings’ affirmation of Malaysia’s sovereign credit rating at A- with a stable outlook on July 18 which followed a similar confirmation by S&P Global Ratings on July 3.
Commenting on the government's operational purposes this year, as stated in the Budget 2019 documents, the government plans to spend RM259.9bil.
Since January to May, a total of RM106.5bil worth of operational spending was made or 41% of total budgeted 2019 operating expenditure
Lim said based on the current fiscal performance, the government is positive of achieving its fiscal deficit target of 3.4% of GDP, while keeping its 2019 current account balance in surplus.
“If there is no trade war between China and the US, two of Malaysia’s largest trade partners, the government would even be confident of achieving the targeted 3.0% of GDP fiscal deficit for 2020.