Malaysia's 2022 budget to focus on recovery, economic reforms

[KUALA LUMPUR] Malaysia's 2022 federal budget will focus on the recovery from the pandemic, rebuilding of national resilience and catalysing reforms, the finance ministry said in its first-ever pre-budget statement on Tuesday.

The budget, due to be presented in Parliament in October, will be crafted on the assumption that the economy will recover from the Covid crisis next year, the ministry said, adding the statement is part of efforts to make the annual budget preparation process transparent.

Malaysia's economy has been weakened by the protracted lockdowns and a raging outbreak, and the crisis eventually lead to a change in government this month. The pre-budget statement affirmed the central bank's 2021 economic growth estimate at 3 per cent to 4 per cent, and showed the fiscal deficit widening to between 6.5 per cent and 7 per cent of GDP, up from 5.4 per cent projected in Budget 2021.

The finance ministry also said there was a need to raise the statutory debt limit to provide the government fiscal room as it grapples with the pandemic. The nation's debt level stood at 56.8 per cent of GDP as of June-end, below the cap of 60 per cent, according to the statement. Malaysia is closed today for Independence Day holiday.

Tax revenue collection for 2021 is estimated at RM162.1 billion (S$52.3 billion), which is 10.3 per cent of GDP.

The government is considering ways to boost tax revenue via higher compliance. One such measure includes a voluntary disclosure plan for indirect taxes where individuals can come forward to declare tax that hasn't been paid, underestimated or erroneously reported.

BLOOMBERG