Malaysia announces budget for 2020, focuses on economy

Malaysian PM says no official word from India on potential import restrictions

Malaysian PM says no official word from India on potential import restrictions

The gross domestic product (GDP) of Malaysia increased 4.7 percent in the starting 6 months of the current year, earlier, the government predicted the economy to grow between 4.3 percent and 4.8 percent this year.

Lim Guan Eng told reporters that given the global economic uncertainties, the country needed to "not only convince but reassure investors" that the Southeast Asian nation will be back on track for fiscal consolidation in 2021.

The government budgeted 297.02 billion ringgit ($70.85 billion) in spending for 2020, 6% lower than this year.

Analysts had expected the government to unveil an expanded budget overall, but it is grappling with a RM1 trillion debt pile left behind by its predecessors and declining revenue.

Lim said the government would also continue to support last-mile connectivity in rural and urban areas by subsidising bus operators with an allocation of RM146 million in 2020.

Inflation is expected to remain well anchored at 2.0 percent in 2020 and the government expects to collect 244.5 billion ringgit in revenue next year. Unlike this year, there will be no repeat of a 30 billion ringgit one-off payout to the government by state energy firm Petronas.

However, Lim ruled out reintroducing a goods and services tax that was repealed a year ago.

The government's operating budget will drop sharply to 241.02 billion ringgit next year from 262.26 billion ringgit allocated for this year.

In an accompanying fiscal outlook report, the government said it would also set aside an additional RM3 billion to speed up ongoing major infrastructure projects.

It added that the economy is expected to grow in the range of 4.5 per cent to 5 per cent over the 2020-2022 period.

Domestic demand is expected to rise 4 per cent this year and 4.8 per cent next year, supported by a stable labour market and low prices.

Policymakers expect petroleum-related revenue to fall 1.4 per cent to RM50.5 billion in 2020, based on an assumed average global crude oil price of US$62 per barrel.

Gross exports are estimated to expand by 0.1% in 2019 and 1.0% the following year. However, projected weakness in global and domestic demand and commodity prices are expected to slash that figure to 29 billion ringgit in 2020. "It is a pragmatic target as the government is striking a balance between supporting growth and keeping its promise for fiscal consolidation".

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