KUALA LUMPUR: Malaysia’s target to lower its fiscal deficit to 2.8 per cent in 2018 from an estimated three per cent in 2017, is achievable, says RAM Rating Services Bhd.
In a statement, the ratings agency said the lower target underscored the government’s commitment to long-term fiscal consolidation.
Furthermore, it said the adjustment to the government’s Medium-Term Fiscal Framework (MTFF) targeted fiscal deficit to an average 2.4 per cent of gross domestic product (GDP) throughout 2018-2020, from a near-balance target by 2020, was realistic and indicated a more gradual pace of fiscal consolidation.
Ram Ratings said fiscal revenue was expected to increase 6.5 per cent to RM240 billion in 2018, driven by easing negative pressures, resilient economic growth and a gradual recovery in global commodity prices.
“While there is a higher likelihood of fiscal slippage leading up to the 14th General Election, there isevidence that the government’s budgetary discipline has improved.
“Notably, fiscal slippage for emolument expenditure has been gradually declining since 2012 whilespending on supplies and services was kept at 2.4 per cent of GDP in 2016 and 2017,” it added. – BERNAMA