Tuesday, January 20, 2015

Budget 2015 reduced by RM5.5 billion, deficit target changed to 3.2%

BY ANISAH SHUKRY


Prime Minister Datuk Seri Najib Razak delivers his speech on the revision of the Budget 2015 at the Putrajaya International Convention Centre today. He said a slew of cuts amounting to RM5.5 billion will take place as part of Putrajaya’s proactive measures. – The Malaysian Insider pic by Nazir Sufari, January 20, 2015.

Prime Minister Datuk Seri Najib Razak delivers his speech on the revision of the Budget 2015 at the Putrajaya International Convention Centre today. He said a slew of cuts amounting to RM5.5 billion will take place as part of Putrajaya’s proactive measures. – The Malaysian Insider pic by Nazir Sufari, January 20, 2015.
Prime Minister Datuk Seri Najib Razak today announced a slew of budget cuts amounting to RM5.5 billion as part of Putrajaya’s “proactive measures” to align itself with plunging global oil prices and revised world economic growth projections.
The cuts would come from the Budget 2015’s operational expenditures that were initially set at RM223.4 billion, while the RM48.5 billion for development would remain untouched, Najib said in his speech today at the Putrajaya International Convention Centre.
Also, the fiscal deficit target of 3% of the Gross Domestic Product (GDP) for the year has been revised to 3.2%.
Najib said this was still lower than 2014’s fiscal deficit of 3.5%. The "proactive measures" to achieve the RM5.5 billion savings are:
“(The government will) optimise outlays on supplies and services, especially overseas travel, events and functions and use of professional services. This will result in savings of RM1.6 billion.
“Second, defer the 2015 Program Latihan Khidmat Negara (National Service) to enable the programme to be reviewed and enhanced, with savings expected at RM400 million.
“Third, review transfers and grants to statutory bodies, GLCs, Government Trust Funds, particularly those with a steady revenue stream and high reserves. This measure will result in savings of RM3.2 billion.
“Fourth, reschedule the purchase of non-critical assets, especially office equipment, software and vehicles, with an expected savings of RM300 million.”
Najib said Putrajaya’s revenue would be enhanced by encouraging companies to register with the Royal Malaysian Customs to enable them to charge and collect the goods and services tax (GST).
He estimated that broadening the tax base would contribute an additional RM1 billion.
Putrajaya would also realise additional dividends from GLCs and GLICs as well as other government entities amounting to RM400 million, said Najib.
He added that the revisions to the budget were necessary as Putrajaya would otherwise face a revenue shortfall of RM8.3 billion due to falling crude oil prices, despite savings of RM10.7 billion after doing away with fuel subsidies.
“Without any fiscal measures, the deficit will increase to 3.9% of GDP against the target of 4% for 2015.
“This requires the government to take measures to reduce the deficit, in line with the government’s commitment towards fiscal consolidation.”
Najib said the GDP growth target between 5% and 6% had been revised to between 4.5% to 5.5%.
To ensure economic growth remained strong, he said Putrajaya would boost exports of goods and services, enhance private consumption, and accelerate private investment.
Among its strategies are postponing the scheduled electricity tariff and gas price hike, and increasing nationwide mega sales.
Meanwhile, Najib announced an initial allocation of RM800 million for the repair and construction of basic infrastructures affected by the recent floods, and another RM893 million for flood mitigation projects.
These included building eight-foot high stilt houses for those who have land and whose homes were damaged by the floods, and handing over 1,000 units of low-cost homes in Gua Musang, Kelantan.
As he concluded his speech, he told Malaysians the country was not in a financial crisis or recession, but simply taking pre-emptive measures.
“We are neither in recession nor a crisis as experienced in 1997, 1998 and 2009, which warranted stimulus packages.
“The strategies announced by the government are proactive initiatives to make the necessary adjustments following the challenging external developments which are beyond our control.
“This is a reality check following, among others, declining global crude oil prices,” he added. – January 20, 2015.
- See more at: http://www.themalaysianinsider.com/malaysia/article/budget-reduced-by-rm5.5-billion-deficit-target-changed-to-3.2#sthash.EQCyfmMj.dpuf

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Hwa Jurong said...
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