Selangor Journal

CGS-CIMB: Budget 2024 likely to focus on fiscal tightening

KUALA LUMPUR, Oct 2 — Budget 2024, scheduled to be tabled on October 13, will likely focus on fiscal tightening with an emphasis on funds reprioritised to households and sectors most needy, said CGS-CIMB Securities Sdn Bhd.

In a note today, the research house expects the government to target a fiscal deficit of 4.3 per cent of gross domestic product or RM84.1 billion in 2024, from the estimated 5.0 per cent or RM90.9 billion this year.

The deficit improvement is expected to be attributed to slightly higher revenue growth, decline in operating expenditure (Opex) and lower development expenditure (DE).

“The decline in Opex is likely to come from the wider implementation of targeted subsidies, primarily electricity tariff, as well as for RON95 and diesel fuel.

“Meanwhile, we project DE at RM90 billion, lower than the RM97 billion budgeted in 2023, as mentioned in the 12th Malaysia Plan (12MP) midterm review,” it said.

On revenue growth, CGS-CIMB projected the fiscal revenue will grow modestly by 1.5 per cent year-on-year in 2024 on the back of slightly higher tax collection, given better 2024 economic growth of 4.6 per cent.

“A few measures announced last year are likely to be implemented, top of the list are the capital gains tax on unlisted shares, global minimum tax, sugar tax on premixed beverages, and the move towards e-invoicing,” it added.

Commenting on the possible comeback of the goods and services tax (GST), CGS-CIMB believes it is likely to appear in the budget speech in some form or another.

“Chances are high that the GST (or a renamed version of it) could be announced for implementation in 2025 or later, allowing for feedback from the general public and ensuring businesses are ready,” it said.

— Bernama

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