KUALA LUMPUR, Feb 24 — The fiscal deficit for the Medium-Term Fiscal Framework (MTFF) 2023 – 2025 is expected to consolidate at a gradual pace with the overall balance averaging at 4.1 per cent of gross domestic product (GDP), the Ministry of Finance (MoF) said.
In an Updates on Economic and Fiscal Outlook and Revenue Estimates 2023 report released today, MoF said at the end of 2025, the fiscal deficit is expected to reach 3.2 per cent while the primary deficit at 0.6 per cent of GDP.
“The lower deficit signifies the government’s commitment to further consolidate its financial position and rebuild fiscal space towards ensuring the sustainability of public finances in the long-run,” it said.
MoF said the revenue is projected at RM908.5 billion or 15.1 per cent of GDP contributed mainly by non-petroleum revenue, which is estimated at RM734.5 billion or 12.2 per cent of GDP.
It said petroleum-related revenue is forecast at RM174 billion or 2.9 per cent of GDP.
Meanwhile, MoF said the total indicative expenditure ceiling for the three years is estimated at RM1.15 trillion or 19.2 per cent of GDP with operating expenditure (OE) allocation projected at RM889.1 billion or 14.8 per cent of GDP while development expenditure (DE) at RM264.2 billion or 4.4 per cent of GDP.
MTFF 2023 – 2025 is formulated based on the latest macroeconomic assumptions, which include global economic developments and changes in commodity prices.
The framework has been revised with underlying assumptions of real GDP growth averaging 4.7 per cent, crude oil prices at US$80 (RM354.4) per barrel and stable crude oil production of 530,000 barrels per day.
Additionally, the framework also incorporates several policy responses and reform initiatives to rebuild fiscal buffer and strengthen public finances in the medium-and long-term, including measures to gradually enhance revenue mobilisation as well as reduce spending wastages and shift towards a more targeted subsidy mechanism.
In conclusion, MoF said the government is committed to enhance governance, accountability and transparency in managing public finances.
“Efforts will be intensified to further improve the efficiency of the tax system, broaden the tax base, increase the effectiveness of the expenditure management and reduce the fiscal risks exposure towards ensuring sound fiscal policy and prudent debt management.
“Fiscal reforms initiatives such as the Fiscal Responsibility Act (FRA), Medium-Term Revenue Strategy (MTRS) and reviewing of public expenditure will further strengthen the fiscal policy framework in supporting the nation’s development agenda and safeguarding the well-being of the rakyat,” it added.
— Bernama
