Malaysia’s new Budget: Some fiscal challenges

November 5, 2018

KUALA LUMPUR - Encapsulated in three focus areas, including implementation of institutional reforms, ensuring the well-being of people and nurturing a culture of entrepreneurship, the broader direction of Malaysia's 2019 Budget is positive, according to ANZ Bank.

Malaysia's  underlying fiscal position, however, will be challenging, the bank's research note says.

"Not only is the revised 2018 budget deficit significantly above the initial target, the underlying correction is mild. The weaker revenue position has not been matched with a commensurate compression in spending (and)  reliance on petroleum revenues further exposes the fiscal position to fluctuations in oil prices.

The path of fiscal consolidation has obviously been delayed. Nonetheless, it will resume from 2019 and more importantly, be supplemented with a Fiscal Responsibility Act in 2021. The "Government is also taking steps to reduce its overall liabilities. (ATI).