KUALA LUMPUR: Malaysia's revenue surged to RM294.4 billion or 16.5 per cent of gross domestic product (GDP) in 2022, buoyed by better-than-expected economic growth.
The government's total expenditure stood at RM395.2 billion or 22.1 per cent of the GDP, according to the Economic & Fiscal Outlook and Revenue Estimates 2023.
The report said the revenue was expected to be lower at RM291.5 billion or 15.4 per cent of GDP this year as a result of slower global economic growth and anticipated moderation of commodity prices.
Total expenditure is estimated to be slightly lower at RM386.1 billion or 20.4 per cent of GDP, mainly due to expiry of Covid-19 Fund and spending optimisation measures.
The report said the higher revenue in 2022 was utilised primarily to cushion the additional requirement for fuel and electricity subsidies.
According to the report, the country's operating expenditure (OE) increased by 25.4 per cent to RM292.7 billion compared to budget estimates last year, mainly due to higher requirements for subsidies and social assistance.
The development expenditure (DE) decreased moderately by 5.3 per cent to RM71.6 billion compared to earlier budget estimates following the reprioritisation and implementation progress of programmes and projects.
On the fiscal deficit, the report said the federal government's fiscal deficit for 2022 dropped to 5.6 per cent of GDP, lower than the estimate of 6.0 per cent.
At the same time, it said the primary deficit, which excluded debt service charges, stood at 3.3 per cent of GDP.
For 2023, the report said OE allocation was estimated to decrease to RM289.1 billion primarily due to lower allocation for subsidies following the expected lower crude oil prices and gradual move towards a more targeted subsidy mechanism.
The DE allocation is estimated to increase significantly to RM97 billion for programmes and projects under the 12th Malaysia Palan involving construction of highways and public transport infrastructures, health facilities as well as educational institutions.
"In addition, a sum of US$3 billion is provided for the redemption of 1Malaysia Development Bhd (1MDB) bond," it said.
Overall, the report said the fiscal deficit was expected to consolidate further to 5.0 per cent of GDP.
Similarly, the primary deficit is estimated to reduce further to 2.5 per cent of GDP.
"The government is committed to continue the fiscal consolidation plan guided by the Medium-Term Fiscal Framework to ensure the sustainability of public finances," it added.