Economic Outlook 2020: Fiscal deficit target 3.2% of GDP in 2020

The government will speed up the implementation of the impactful projects such as the Pan Borneo Highway, Mass Rapid Transit 2 and Gemas-Johor Bahru Electrified Double Track Project.

KUALA LUMPUR: The Federal Government has set a fiscal deficit target of 3.2% of GDP for 2020 versus 3% originally announced in the 2019 Budget.

However, the deficit remains on a consolidation path, it said. In 2019, the fiscal deficit was 3.4%.

Pre-emptive measures will reduce the deficit with fiscal consolidation remaining on its trajectory and the debt position at a manageable level.

It expects revenue of RM244.5bil, or 15.2% of GDP in 2020. Tax revenue expected to rise to RM189.9bil and non-tax revenue at RM54.6bil.

Total expenditure is forecast at RM297bil, or 18.4% of GDP, of which operating expenditure (OE) is RM241bil and development expenditure (DE) is RM56bil.

“While fiscal policy continues to support economic growth and maintain the resilience of the economy, the Government remains committed towards fiscal consolidation efforts to strengthen the country’s financial position, ” it said.

The government will speed up the implementation of the impactful projects such as the Pan Borneo Highway, Mass Rapid Transit 2 and Gemas-Johor Bahru Electrified Double Track Project.

Small-scale project will also be implemented such as upgrading of dilapidated schools, clinics, treatment plant and sewage facilities as well as suburban broadband infrastructure.

Allocation to rationalise Federal Land Development Authority (Felda) and Lembaga Tabung Haji as well as higher debt servicing commitment for SRC International Sdn Bhd.

Focus will be on programmes which will create more employment opportunities and income generation, thus improving the well-being of the people.

The revised total revenue is expected to increase RM1.5bil to RM263.3bil versus original estimates, constituting 17.4% of GDP.

Tax revenue is expected to rise by 3.4% to RM180bil, or 11.9% of GDP due to higher collection of sales tax and service tax. Non-tax revenue is projected is projected at RM83.3bil, or 5.5% of GDP.