Malaysia’s fiscal deficit to widen to 3.7% for 2018, 3.4% for 2019



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PETALING JAYA: Malaysia’s fiscal deficit is expected to widen to 3.7% of GDP for 2018 before easing to 3.4% for 2019.

According to the “Fiscal Outlook and Federal Government Revenue Estimates 2019” report, the spike in fiscal deficit from the earlier estimate of 2.8% is due to additional tax refunds of RM4 billion, the off-budget commitments and supplementary expenditure requirements.

The additional expenditure of about RM16 billion includes special cash assistance for civil servants (RM2.7 billion), acquisition of Eastern Dispersal Link (EDL) highway (RM1.3 billion), LRT3 project and Electrified Double Track project (RM2.4 billion), allocation for sewerage infrastructure, repairs and maintenance (RM9.5 billion).

However, the government is expected to receive additional revenue of RM7 billion from Petronas dividends, resulting in a net fiscal implication of around RM13 billion.

Overall, the country’s fiscal deficit of GDP is revised upward from 2.8% to 3.7% for 2018.

For 2019, fiscal deficit is estimated to narrow to RM52.1 billion or 3.4% of GDP, after taking into account RM7 billion to partially finance the refunds.

The government’s fiscal stance will continue to be expansionary, where the amount spent into economy is higher than the revenue collected. Nonetheless, it believes the stance is appropriate considering the nation’s high level of domestic savings.



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