KUALA LUMPUR, Jan 20 ― Prime Minister Datuk Seri Najib Razak unveiled today a host of spending cuts to Budget 2015 aimed at helping Malaysia weather oil prices that have fallen by more than half since last year.
Facing a drop in government revenue of RM8.3 billion, Putrajaya is targeting to reduce operational expenditure by RM5.5 billion in order to reduce the government’s chronic overspending.
These are among areas where the government intends to save on expenditure for 2015:
• Putrajaya is expected to save RM1.6 billion by optimising spending on overseas travel, events and the use of professional services in the day-to-day operations of the government.
• The government will also postpone RM300 million worth of purchases of non-critical assets for the civil service, especially items such as office equipment, software and vehicles.
• National Service programme for youths will be frozen for 2015 for an expected savings of RM400 million.
• Putrajaya will save RM3.2 billion by reviewing fund transfers and grants to government-linked companies, government trust funds and statutory bodies, particularly those having a steady stream of revenue and with high reserves.
Beyond making these cuts, Najib also said efforts will be made to boost tax collection by encouraging more companies to register under the Goods and Services Tax scheme, saying that this could help the government rake in RM1 billion more in tax.
He said that the government stood to save RM10.7 billion by removing direct fuel subsidies for the public and using the managed float mechanism for RON95 petrol and diesel.
Without today's spending cuts and budget adjustments, the budget deficit would hit 3.9 per cent instead of the 3.0 per cent targeted last October, he said. The government is now setting a target of 3.2 per cent in budget deficit for this year.
In what appears to be a bid to keep the economy pumping, Najib confirmed today that no cuts would be made to the RM48.5 billion allocated for development expenditure.
Major infrastructure projects such as the second phase of the Mass Rapid Transit project, Light Rail Transit extension and the planned high-speed rail link connecting Kuala Lumpur and Singapore will carry on as scheduled, he said.
He also confirmed national oil giant Petronas's Refinery and Petrochemicals Integrated Development project in Pengerang, Johor will still be carried out.