KUALA LUMPUR: The government’s total expenditure for 2025 is projected to rise to RM421 billion, or 20.2% of gross domestic product (GDP).
This is mainly driven by higher emoluments and retirement charges following the implementation of the Public Service Remuneration System (SSPA) and increased debt service payments.
According to the Fiscal Outlook and Federal Government Revenue Estimates report, an estimated RM335 billion, or 16.1% of GDP, is allocated for operating expenditures (OE), while development expenditures are projected to sustain at RM86 billion, or 4.1% of GDP.
“The government will pursue subsidy rationalisation initiatives to address leakages and wastages while enhancing the social assistance programmes,“ the report stated.
Further, the report stated that efforts to optimise expenditure will be intensified, including rationalising statutory bodies to address overlapping functions, ensuring efficient spending and maximising outcomes.
DE will be focused primarily on the economic sector, with a significant portion of the allocation dedicated to financing infrastructure projects that generate economic activities and promote quality of life.
“This includes flood mitigation, water supply, highway construction, improvement to healthcare facilities and educational institutions projects,“ the report stated.
Furthermore, the fiscal deficit is targeted to decrease to 3.8% of GDP in 2025, reflecting the government’s continued commitment to fiscal consolidation.
This reduction will provide ample fiscal space to address the impact of global uncertainties and reduce long-term debt burdens, with the primary balance projected to record a lower deficit of 1.2% of GDP.
It added that this prudent fiscal approach aims to boost economic resilience and sustain growth and development, thereby enabling the government to manage its exposure to risks.
