PETALING JAYA: Budget 2024 is expected to allocate lower subsidies as the government accelerates its efforts to remove the top 20% (T20) income earners from enjoying blanket subsidies.
TA Research head of research Kaladher Govindan said Budget 2024 could include a total subsidy of RM40bil, down by 32% from the RM58.6bil allocated for this year.
“The implementation of targeted subsidy measures had already started this year when the government removed electricity tariff subsidies for large companies and announced a 10 sen per kWh surcharge for domestic users who consume more than 1,500-kilowatt hours effective July.
“The cost savings for the government will widen next year when it imposes the same mechanism on fuel subsidy that would effectively remove the T20 group from enjoying the bulk of the benefits,” he said in a research note.
Kaladher also anticipated a stronger growth in revenue versus spending next year, which would result in a lower fiscal deficit of RM84.1bil or 4.2% to the gross domestic product in 2024. This would be on track to achieving the government’s 3.5% fiscal deficit target by 2025.
Under Budget 2024, Kaladher forecasts government revenue to increase by 3.8% to RM302.5bil due to greater contribution from direct and indirect taxes as well as non-tax receipts.
In contrast, the total budget allocation for 2024 is expected at RM387.3bil, consisting of RM292.3bil and RM95bil for operating and development expenditures, respectively.