Main points of the Fiscal Report for 2020 and 2021
Federal Government expenditure for 2021
* RM322.5bil or 20.6% of GDP for 2021 Budget where RM236.5bil of 73.3% for operating expenditure, RM69bil or 21.4% to development expenditure, RM17bil (5.3%) for Covid-19 fund.
* Sectoral allocation excluding Covid-19 fund, 37.7% for programmes under social sector, economic (18.3%), security (11%), and general administration (7.7%).
* Balance of budget amounting to RM77.4bil (25.3%) for charged expenditure and transfer payments.
* Operating Expenditure allocated RM236.5bil of 15.1% of GDP, up by 4.3% from revised budget of RM226.7b.
* Education Ministry allocated 16% of Operating Expenditure for repairs and maintenance of school facilities.
* Subsidies and social assistance – including subsidies for goods and services, incentives, to fall by 6.4% to RM18.9bil.
Development expenditure at RM69bil, up by 38% from 2020 to support economic growth, provide better quality of life and living environment.
* Of the RM69bil, RM67.3bil will be direct allocation and RM1.7bil for local to state governments and government-linked entities.
Federal Govt revenue in 2021
* Federal Government revenue expected to increase by 4.2% to RM236.9bil or 15.1% of GDP due to improving economic growth and business prospects.
* Tax revenue collection is expected to increase by 13.8% to RM174.4bil.
* Tax revenue constitutes 11.1% and non-tax revenue 4%, as percentage of GDP.
* Direct tax collection expected to increase by 14.6% to RM131.9bil or 55.7% to total revenue – largely due to the companies income tax, petroleum income tax and individual income taxes.
* Indirect tax collection to rebound by 11.4% to RM42.5bil, mainly due to higher SST collection. SST collection for 2021 is expected to increase by 13.7% to 27.9bil due to higher consumer spending.
* Non-tax revenue to decline by 15.5% to RM62.5bil in 2021 mainly due to lower proceeds from investment income. Dividends from Petronas and Khazanah are estimated to be RM18bil and RM1bil.
Fiscal deficit, expenditure, fiscal stimulus
* Federal Govt fiscal deficit to rise 6% of GDP in 2020
* Public sector debt rose to RM1.23 trillion or 85.5% of GDP at end-June.
* Federal Govt debt RM854.1bil or 69.4% of total debt, non-financial public corporations (NFPCs) at 24.4% and statutory bodies 6.2%. NFPCs’ debt rose to RM300.4bil.
* In 2021, gross borrowing around 11% of GDP.
* In 2021, Federal Govt debt to rise to around 61% of GDP.
* For 2020, revenue shortfall to be about 20% from budget estimates. Total revenue to be lower at RM227.3bil or 15.8% of GDP vs budget estimates RM244.5bil.
* Total expenditure to rise by 6% or RM17.7bil to RM314.7bil vs initial estimates of RM297bil.
* Net increase due to fiscal stimulus injection of RM39bil but offset by savings of RM20.3bil.
* Operating expenditure to be reduced by 5.9% to RM226.7bil from original estimates of RM241bil.
* Development Expenditure to decline by 11% to RM56bil.
Federal Govt revenue in 2020
* Federal Govt revenue in 2020 to fall by 14% to RM227.3bil from RM264.4bil in 2019 on lower tax collection.
* Tax collection major contributor to Federal Govt revenue at RM153.3bil or 67.4% to total revenue.
* Direct tax – which accounts for 50.6% of total revenue -- to fall by 14.6% to RM115.1bil vs RM134.7bil in 2019.
* Companies income tax (CITA) to fall to RM59.4bil vs RM63.7bil in 2019. Original estimate of RM75.5bil.
* Individual income tax to decline by 4% to RM35.9bil from RM37.4bil earlier.
* Petroleum income tax to fall 58.9% to RM8.5bil from RM20.8bil in 2019.
* Indirect tax at 16.8% of total revenue, to fall by 19.4% to RM38.1bil from earlier RM47.3bil.
* Sales Tax and Service Tax (SST) to be lower at RM24.5bil versus RM27.7bil in 2019.
* Excise duties to decline by 19.1% to RM8.5bil from RM10.5bil in 2019 as crude oil prices average US$40.
* Non-tax revenue to decline to RM74bil from RM83.8bil, mainly due to higher dividends from Petronas of RM34bil.
* Petroleum-related revenue to fall by 40.3% to RM50bil in 2020 from RM83.8bil in 2019. Non-petroleum revenue to decline to 1.8% to RM177.3bil from RM180.6bil in 2019.
Federal Government expenditure for 2020
* Federal Government total expenditure allocation 2020 increased to RM314.7bil from initial budget estimate of RM297bil.
* The increase of RM17.7bil due to the fiscal stimulus injection of RM38bi, savings from expenditure of RM20.3bil.
* About 55% or RM11bil of savings due to shortfall in development expenditure.
* Operating expenditure down by 5.9% or RM14.3bil to RM226.7bil from initial RM241bil.
* Development expenditure reduced to RM50bil from original RM56bil (RM54.2bil in 2019).
* Economic sector accounts for 57.1% of the development expenditure, social 26.1%, security 11.1% and general administration 5.7%.
* Allocation of RM28.5bil, mainly for upgrading public transportation and communication connectivity infrastructure, improving public utilities.
* Transport sector gets RM10.2bil, mainly for Pan Borneo Highway, electrified double track project, MRT 2 and Klang Valley Double Track Phase one infrastructure and system upgrades.
* Overall spending for social sector to decline by 9.8% to RM13.1bil in 2020.
* Covid-19 Fund saw a RM45bil fiscal injection