KUALA LUMPUR: The Government has implemented a "zero-based budget" system to avoid a "Christmas shopping" scenario where ministries rush to finish up allocations before the year ends, said the Finance Ministry.
Its minister Lim Guan Eng (pic) said zero-based budgeting would maximise savings and returns.
Zero-based budgeting is a method of budgeting in which all expenses must be justified for each new period. It starts from a "zero base" and every expense is analysed based on whether it is needed and how much it costs.
Lim said the government wants to give priority to spending on matters that are necessary.
"What is important is that we do not want (the purchasing) to be done at the year end, what is termed 'Christmas shopping', because the approved allocations had not been spent.
"What they (ministries) do is they try to finish (the money allocated) by the end of the year," he said in his winding up address for his ministry on issues brought by lawmakers during the Budget 2019 debates.
Lim said the current expenditure comprises salaries, rents, utility bills, contra items and maintenance expenses (among others). This was unlike before where the expenditure was prepared in an incremental manner.
He said that the previous government did not consider actual (financial) commitments.
"Every year, allocations prepared are insufficient as new programmes (are introduced) without looking at its effectiveness.
"At the same time, the government had to bear the actual commitments of the ministries, the country's debt and off-budget expenditures," he said in reply to Ahmad Maslan (BN-Pontian) who asked if the Government is doing away with the outcome-based budget system.