KUALA LUMPUR, Feb 28 (NNN-BERNAMA) – Fitch Solutions, the global ratings company, today lowered Malaysia’s 2023 budget deficit forecast, as a share of gross domestic product (GDP) to 4.9 percent, from 5.3 percent previously, which is somewhat aligned with the Malaysian government’s fiscal projections.
The research house now expects revenue in the country to come in much higher than before, in 2023, after revenue collection surged by 25.9 percent in 2022.
Fitch Solutions also noted that Malaysia’s recent budget is expansionary overall, with the government announcing a slew of measures, to lower the cost of living amid high inflation, as well as, more progressive taxes.
“Broadly speaking, we have aligned our revenue and expenditure forecasts with the government’s projections for now,” it said.
Malaysian Prime Minister and Finance Minister, Anwar Ibrahim, on Feb 24 unveiled the country’s 2023 budget of 386.1 billion ringgit (86.21 billion U.S. dollars).
On the revenue front, the government expects a decline of about one percent to 291.5 billion ringgit in 2023, as opposed to a revised estimate of 294.4 billion ringgit in 2022.
This is partly due to a two-percentage-point reduction of the individual income tax rate, for those who earn between 35,000 ringgit and 100,000 ringgit annually.
To partially offset this, income taxes among higher-income individuals will be raised by between 0.5 and two percentage points, while the government will also introduce a luxury goods tax.
On the expenditure side, the government projects a marginal 1.2 percent decline in operating expenditure to 289.1 billion ringgit in 2023, but net development expenditure is set to increase about 37 percent to 96.3 billion ringgit as compared to 70.2 billion ringgit in 2022.
Overall, the total expenditure (net of loan recoveries) is projected to decline from a revised estimate of 393.8 billion ringgit to 385.4 billion ringgit, mainly due to savings from the abolishment of the COVID-19 fund. (1 ringgit equals 0.22 U.S. dollars)– NNN-BERNAMA