KUALA LUMPUR: The government’s target to reduce its fiscal deficit to three per cent by 2015 is achievable, says the Ministry of Finance (MoF).
Its secretary-general Datuk Dr Mohd Irwan Serigar Abdullah said the government’s policy is very clear in reducing the deficit and the total deficit of about RM35 billion currently is still manageable.
“In terms of spending, we have already calculated and that is why we announce the government allocation of RM251 billion in Budget 2013. We are very committed to achieve that target,” he told reporters after the Malaysia Economic Association 2013 Post-Budget Dialogue, here yesterday.
Meanwhile, the group chief economist of RAM Holdings, Dr Yeah Kim Leng said the government has the right plan to set the medium-term target and this is what the private sector and rating agencies are looking for in medium to long-term plan, that is to ensure a balanced budget.
“What is important is that the government has pointed out that it will continue to see a declining fiscal deficit so we can, by 2020, achieve a balanced budget.
“Currently we are also seeing some fiscal reforms undertaken to ensure fiscal sustainability and this concern is still manageable,” he said.
According to the rating agency’s forecast, Yeah said Malaysia’s fiscal position still remained manageable although it has to do sufficiently larger spending for this year and next year.
However, over the medium-term, RAM expects the government will try to undertake more reforms to ensure that further spending are reduced and revenue sources are diversified as well as increased, to trim the fiscal deficit, he added.
At a debt level of 53 per cent, he said it is not the main concern for Malaysia as most developed countries’ debt to gross domestic product (GDP) ratio are above 80 to 100 per cent.
“If you look from that perspective, it is not a question of the size of the debt to GDP ratio, what should be of concern is how well the government is spending, to sustain growth.
“As long we can achieve growth and full employment, this issue is not the main focus for rating agencies,” he added. — Bernama