KUALA LUMPUR, Oct 8 (NNN-Bernama) — The Malaysian government’s gross domestic product (GDP) growth target of 4.0 per cent-5.0 per cent for 2023 is realistic and will be mainly supported by domestic demand amid softer global activity, said RAM Rating Services Bhd.
As announced in Budget 2023 on Friday, the government expects to collect a reduced amount of fiscal revenue next year at RM272.6 billion (RM1=US$0.215) compared to 2022’s estimate of RM285.2 billion, as the smaller Petronas dividend more than offset increases in tax revenue.
Meanwhile, operating expenditure reduces to RM272.3 billion in Budget 2023 on account of a smaller allocation for subsidies and social assistance amid expectations of lower commodity prices and the rollout of targeted subsidies.
The government, however, increased development expenditure to RM94.3 billion from 2022’s budget of RM71.2 billion amid higher spending on the economics sector partially due to the commencement of new infrastructure projects.
Malaysia also continues to undertake a gradual fiscal consolidation path with the fiscal deficit projected to narrow to 5.5 per cent by end-2023, from 5.8 per cent in 2022, in line with reaching the targeted 3.5 per cent by 2025 set under the 12th Malaysia Plan.
Government debt is estimated to remain hefty at RM1.14 trillion or 63 per cent of GDP. The government said this raises some concern as fiscal space is constrained, with debt-servicing costs remaining significant at 16.9 per cent of revenue in 2023.
— NNN-BERNAMA
