PUTRAJAYA: Most analysts will understand and welcome the government’s decision to revise the country’s fiscal deficit target for 2015 to 3.2 per cent of gross domestic product (GDP), up from the 3.0 per cent, said Minister in the Prime Minister’s Department, Datuk Seri Abdul Wahid Omar.
“We believe 3.2 per cent is still an improvement from 3.5 per cent in 2014. It is also very much within the government’s long-term plan to move towards a balanced budget come 2020,” he said when asked whether the deficit revision would affect the country’s credit rating.
Speaking on the sidelines of a special address on measures to strengthen Malaysia’s economic resilience by Prime Minister Datuk Seri Najib Tun Razak, who is also Finance Minister, here yesterday, Abdul Wahid said the rating agencies normally don’t look at the fiscal position only but also current account and the country’s economic fundamentals.
“We view this economic growth at 4.5 per cent to 5.5 per cent as a ‘credible’ growth,” he said, adding the current account position was still maintained at surplus and overall, Malaysia would not face the twin deficit.
Earlier, he said the government had to make adjustments and optimise its spending due to falling oil prices and reducing the fiscal deficit from 3.5 per cent to 3.2 per cent.
However, the move would indirectly affect the country’s annual growth forecasts at 4.5 per cent to 5.5 per cent this year, down from an earlier target of 5.0 per cent to 6.0 per cent.
“We have to optimise our spending and not cut expenditure completely. This is very important for us to continue all development projects in order to improve infrastructure and keep the country’s economic momentum.
“Although the government will reduce operating expenditure by RM5.5 billion, the development expenditure at RM48.5 billion remain intact,” he said. — Bernama