Practise strict fiscal discipline to increase revenue, govt told

PETALING JAYA: The Federal Government must continue to explore ways to increase its revenue from different sources and remain prudent to strengthen its financial position, says the Auditor-General.

The AG, in his 2021 report said, the government also needs to find ways to reduce arrears and practise strict fiscal discipline to increase revenue as the national debt continues to be on the uptrend.

"Ministry secretaries-general and department heads must get more involved and be hands-on in financial-related matters.

"There has to be an effective check and balance and periodic evaluation to the work performed by officers, who should also be continuously trained to improve their skills and capabilities," he said in his closing remarks.

The AG said there was also a need to improve the effectiveness of the internal audit units in ministries and government departments.

This included ensuring that unit members get adequate training and guidance, to provide an annual audit plan so that audit work can be prioritised as well as make recommendations that can have a positive impact on the organisation.

The AG said government funds spent on development projects must also have a multiplier effect on the economy and the discipline to manage government expenditure, revenue generation efforts and repayment of loans should also be improved.

This, he said, was important so that excess revenue could be used to finance other development projects and reduce reliance on new loans.

His recommendations came after an audit revealed that the government's debts as of 2021 totalled RM979.8bil, up from RM879.5bil in 2020.

The debt-to-Gross Domestic Product (GDP) ratio was 63.4% as against 62% in 2020.

This was, however, still lower than the statutory limit of 65% debt-to-GDP ratio.

The AG said the Federal Government's overall debt and financial liabilities increased to RM1.29 trillion in 2021 from the RM1.18 trillion recorded the previous year. This was an increase of RM111bil or 9.4%.

Revenue increased to RM233.7bil, an almost 4% increase compared with RM225bil the year before.

The main source of revenue came from taxes totalling almost RM80bil.

The government's main spendings were on emoluments (RM85.8bil), debts (RM38bil), retirement payments (RM28bil), and subsidies (RM13.1bil).

In 2020, the cost was RM82.9bil, RM34.5bil, RM26.4bil, and RM4.6bil respectively.

Development expenditure amounted to RM64.2bil, an increase of 25% from the RM51.3bil spent in 2020.

Included in the development expenses are amortisation payments for guarantee commitments amounting to RM9.6bil, payment of PFI liabilities totalling RM2.9bil and classification of operating expenses amounting to RM8.7bil.

The Federal Government, he said, has also continued to record a deficit, amounting to RM98.7bil, with a deficit ratio of 6.4% to the GDP.

In 2020, the deficit recorded was RM87.6bil or a GDP ratio of 6.2%

He said it was also vital that policies established related to accounting and financial statement reporting were in line with the government's accounting standards.

There also has to be clear work procedures, a greater understanding and compliance to financial regulations and closer monitoring of the work carried out by officers to ensure quality and integrity is not compromised.

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Debts , GDP , AG’s report , Auditor-General


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