Fiscal Outlook 2021: Deficit to average 4.5% of GDP in 2021-23

As for petroleum-related revenue, it was projected at RM121.3bil or 2.4% of GDP.

KUALA LUMPUR: The government targets the fiscal deficit to average 4.5% under the Medium-term Fiscal Framework 2021-2023 while debt is expected to increase but at a manageable pace.

In the Fiscal Outlook, it said the framework provided a macro-fiscal projection over three years where it sets targets for revenue and expenditure as a guide for the government’s fiscal path over this period.

The framework was based on updated macroeconomic and fiscal assumptions after including impact of Covid-19 crisis.

The assumptions include real GDP of 4.5% and 5.5% (nominal GDP growth of 5.5% and 6.5%), crude oil prices between US$45 and US$55 per barrel and crude oil production of 580,000 barrels per day.

It also assumed total revenue to reach RM731bil or 14.7% of GDP, mainly contributed by non-petroleum revenue of RM609.7bil or 12.3% of GDP.

As for petroleum-related revenue, it was projected at RM121.3bil or 2.4% of GDP.

It said the government would seek to boost revenue by exploring new sources, widening revenue base, improving tax administration and adopting the medium-term revenue strategy (MTRS).

The total indicative ceiling for the three-year expenditure estimated at RM959.8bil or 19.3% of GDP.

Operating expenditure allocation is expected to be RM730.3bil or 14.7% of GDP while development expenditure to be at RM212.5bil or 4.3% of GDP.

The indicative ceiling will provide broad guidance to ministries and agencies in their budget planning to ensure a more targeted and disciplined fiscal management.