KUALA LUMPUR, Sept 21 ― In order for Malaysia to maintain a continuous growth in its Gross Domestic Product (GDP), UOB Global Economics and Markets Research expects the government to slash huge "giveaways” in the upcoming Budget 2017 announcement.

The market research unit of United Overseas Bank noted that fiscal deficit came in at RM32.8 billion or 5.6 per cent of the GDP in the first half of the year and added that the targeted fiscal deficit of 3.1 per cent of the GDP can still be achieved this year.

However, it also said maintaining sustainability will be tough due to a prolonged slowdown in global trade and demand that is cutting into revenues.

"The budget’s aim should be macro stability which infers any expansionary plans should be done with fiscal discipline. This infers striking a balance between spending priorities and resource constraints.

"This is important as rating agencies have sounded that wavering on fiscal discipline and broader public finances that lend to higher debt ratios could prompt negative ratings action on Malaysia’s credit profile that would push up the costs of tapping bond markets and borrowing,” it said in a statement.

In terms of development expenditure, UOB’s market research arm forecasts slightly higher allocation of RM47 billion in Budget 2017 ― an injection of RM1 million compared to Budget 2016 ― for transportation, logistics, education, health, housing, national security, agriculture and rural development.

"We do not expect new mega construction projects to be introduced in the coming budget.

"The government will reiterate construction and transportation projects including the Mass Rapid Transit two and three, Light Rail Transit 3, Bus Rapid Transit, highways, and airports.

"Government spent more than RM30 billion on rail infrastructure over the past four to five years and expected to spend another RM40 billion to enhance connectivity,” it said.

As for housing, UOB Global Economics and Markets Research believes the government will continue to focus on addressing matters on affordable homes by allowing applicants to receive full loan for houses priced below RM300,000.

"Another possibility is extending the 50 per cent stamp duty exemption on transfer and loan agreements for property below RM500,000,” it said.

On cooling measures to bridge loans for homebuyers, UOB dished out several measures, among others to include revisions to the loan-to-value ratio of 70 per cent for the third or more properties.

This, it said, will allow the developers' interest bearing scheme to be focused for first-time home buyers and properties below RM500,000.

Prime Minister Datuk Seri Najib Razak is scheduled to table Budget 2017 in Parliament on October 21.

Recently, Najib announced for those who have ideas on next year’s budget can forward them to him directly by submitting proposals to bajet2017.najibrazak.com.