Putrajaya refrains from cuts but deficit set to spike

BUDGET 2019 | The new Pakatan Harapan government had given ample forward guidance that there will be sacrifices under Budget 2019 but it turns out there is no substantial reduction in overall spending.

Putrajaya is set to boost spending with a total budget of RM314.55 billion, excluding an RM2 billion contingency fund.

This is higher than the RM282.3 billion tabled by the previous BN government in 2018.

However, the expansionary budget will also see a spike in the country's deficit.

The deficit was at three percent in 2018 and the previous government had targetted to reduce it to 2.8 percent.

However, the deficit is now expected to spike to 3.7 percent for 2018 amid a revenue shortfall from the three-month tax holiday and the switch from the Goods and Services Tax (GST) to the Sales and Services Tax (SST) under the new government.

Finance Minister Lim Guan Eng said the spike in the deficit was also due to the previous BN government failing to provide for items such as 1MDB's debt and the takeover of the Eastern Disperal Link Highway.

However, the Harapan government will try to rein this in under Budget 2019, by targeting a deficit of 3.4 percent in 2019.

This means the country will now be some way off from achieving a balanced budget, which was previously targeted for 2020.

Under the Budget 2019, RM259.85 billion (82.61 percent) will be allocated for operations expenditure (excludes contingency fund) while RM54.7 billion (17.39 percent) will go to development expenditure.

In the previous budget, RM282.3 billion (RM83.59 percent) went to operations expenditure while RM46 billion was allocated for development expenditure. - Mkini