KUALA LUMPUR, Nov 11 — The government aims to reduce the fiscal deficit to three per cent in the medium term, as outlined in the Madani Economy framework and the Public Finance and Fiscal Responsibility Act 2023 (Act 850).
Deputy Finance Minister Lim Hui Ying said the fiscal deficit is expected to decrease to 4.3 per cent of gross domestic product (GDP) in 2024, down from 5.0 per cent in 2023, with projections indicating a further drop to 3.8 per cent by 2025.
She added that in the medium term, the government will continue implementing fiscal reforms, including the development of a Medium-Term Revenue Strategy, to boost revenue mobilisation, alongside a phased approach to targeted subsidies and optimised public spending.
“The government is also advancing institutional and governance reforms, such as enhancing public-private cooperation mechanisms through the Public-Private Partnership Masterplan 2030, drafting new legislation to improve government procurement, and strengthening the governance of state-owned companies.
“These measures will enhance the credibility and effectiveness of public financial management,” she said in the Dewan Rakyat today.
She was responding to a question from Tebrau MP Jimmy Puah Wee Tse on the government’s plans to introduce further fiscal reforms to strengthen the nation’s finances and economy.
Regarding the ringgit, Lim assured that the government would ensure it is traded in an orderly manner.
She noted that Bank Negara Malaysia (BNM) would remain vigilant in managing excessive fluctuations in the foreign exchange market while taking proactive steps to promote the ringgit’s use in international trade and investment.
As part of this effort, the government and BNM are exploring opportunities for local currency settlement cooperation with key trade partners, including China, Thailand, Indonesia, and other Asean countries with significant bilateral trade.
“As Asean chair in 2025, the government will continue leading efforts to expand the use of regional currencies across Asean,” she said.
Responding to a supplementary question from Merbok MP Mohd Nazri Abu Hassan on the introduction of new taxes, the increase in the sales and service tax, and the anticipated rise in goods prices, Lim explained that these measures are essential for sustaining development and strengthening the country’s fiscal position.
She acknowledged that tax increases and rising costs, particularly in key sectors such as logistics and fuel, could affect the price of goods.
“While the government expects price increases and the cost of living to remain controlled in the coming period, we cannot rule out slight increases due to external factors, such as global commodity prices and supply chain disruptions,” she added.
— Bernama
