Economist calls for rebalancing of expenditures in Budget 2018

PETALING JAYA: The executive director of the Socio-Economic Research Centre has urged the government to tackle the apparent imbalance between the country’s operating and development expenditures in Budget 2018.

Lee Heng Guie, who heads the think-tank under the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM), said development expenditure was estimated at RM46 billion, suggesting a “disappointing” 0.1% growth, while federal revenue was expected to grow 6.4% to about RM239.9 billion, The Edge reported yesterday.

It reported him as adding that the shrinking of the operating surplus to an average of RM3.6 billion annually from 2008 to 2018, from an average of RM13.9 billion from 2001 to 2007 underscored a lack of fiscal commitment to restrain operating expenditure.

“Operating expenditure has been on the rise for two consecutive years now, but the development expenditure to gross domestic product ratio seems to be going downhill,” he was quoted as saying in calling for a reprioritising of the expenditure.

He reportedly said this at a forum on Budget 2018 jointly hosted by ACCCIM and the Chinese Chamber of Commerce and Industry of Kuala Lumpur and Selangor (KLSCCCI).

The economist, who served with Bank Negara Malaysia for almost 12 years and with financial services firms for 18 years, was also quoted as saying that the move to raise the minimum pension for retired civil servants to RM1,000 per month may put a strain on government expenditure in the long-term.

A contribution system should be implemented for civil servants as one of the measures in addressing the imbalance in the government’s operating expenditure, he was quoted as saying.

He also suggested phased implementation of a defined contribution for public pension, giving the example of the Employees Provident Fund (EPF), The Edge reported.

In tabling Budget 2018 at the Dewan Rakyat on Friday, Prime Minister Najib Razak announced that the federal government was expected to collect RM239.86 billion in revenue next year, and proposed a total allocation of RM280.25 billion, an increase of over RM20 billion from this year.

He also said a sum of RM234.25 billion would be allocated for operating expenditure and RM46 billion for development expenditure. -FMT