KUALA LUMPUR: The government aims to reduce the fiscal deficit to three per cent in the medium term, as outlined in the MADANI Economy framework and the Public Finance and Fiscal Responsibility Act 2023 (Act 850).
Deputy Finance Minister Lim Hui Ying said that the fiscal deficit as a percentage of Gross Domestic Product (GDP) is expected to fall to 4.3 per cent in 2024, down from 5.0 per cent in 2023, and is projected to decline further to 3.8 per cent by 2025.
Lim added that, in the medium term, the government will continue implementing fiscal reforms, including the development of a Medium-Term Revenue Strategy to boost revenue mobilisation, alongside a phased approach to targeting subsidies and optimising public spending.
“The government is also advancing institutional and governance reforms, such as enhancing public-private cooperation mechanisms through the Public-Private Partnership Masterplan 2030, drafting new legislation to improve government procurement, and strengthening the governance of state-owned companies. “These measures will enhance the credibility and effectiveness of public financial management,“ she said during a Dewan Rakyat question and answer session.
The response followed a question from Jimmy Puah Wee Tse (PH-Tebrau) on the government’s plans to introduce further fiscal reforms to strengthen the nation’s finances and economy.
Regarding the ringgit, Lim assured that the government would ensure it is traded in an orderly manner.
She noted that Bank Negara Malaysia would remain vigilant in managing excessive fluctuations in the foreign exchange market while taking proactive steps to promote the ringgit’s use in international trade and investment.
As part of this effort, the government and BNM are exploring opportunities for local currency settlement cooperation with key trade partners, including China, Thailand, Indonesia, and other ASEAN countries with significant bilateral trade.
“As ASEAN chair in 2025, the government will continue leading efforts to expand the use of regional currencies across ASEAN,“ she said.
Responding to further questions from Mohd Nazri Abu Hassan (PN-Merbok) on the introduction of new taxes, the increase in the sales and service tax, and the anticipated rise in goods prices, Lim explained that these measures were essential for sustaining development and strengthening the country’s fiscal position.
She acknowledged that tax increases and rising costs, particularly in key sectors such as logistics and fuel, could affect the price of goods.
“While the government expects price increases and the cost of living to remain controlled in the coming period, we cannot rule out slight increases due to external factors, such as global commodity prices and supply chain disruptions,“ she added.
