Putrajaya scraps balanced budget by 2020 goal, as GDP growth target slashed

Prime Minister Tun Dr Mahathir Mohamad said today that Putrajaya is estimating a fiscal deficit of 3 per cent to the GDP. — Picture by Yusof Mat Isa
Prime Minister Tun Dr Mahathir Mohamad said today that Putrajaya is estimating a fiscal deficit of 3 per cent to the GDP. — Picture by Yusof Mat Isa

KUALA LUMPUR, Oct 18 — Prime Minister Tun Dr Mahathir Mohamad said today that Putrajaya is estimating a fiscal deficit of 3 per cent to the gross domestic product (GDP) by 2020, abandoning the former target of a balanced budget.

Dr Mahathir, while tabling the mid-term review of the 11th Malaysia Plan in Parliament here, also announced that GDP per annum from now to 2020 will average between 4.5 and 5.5 per cent, down from between 5 to 6 per cent.

“With enhancement in governance and rise in revenue, the government is confident that the fiscal position can be healed by end of 2020. The government is targeting a fiscal deficit of 3 per cent to GDP in 2020,” he said.

“Among the pro-active steps that has successfully been taken is to postpone the implementation of HSR. At the same time, the government must also ensure that the decrease of public spending will not affect economic growth,” he added.

Finance Minister Lim Guan Eng was quoted saying in August that the target this year would already be 2.8 per cent of GDP.

Dr Mahathir also assured that while tightening up Putrajaya’s belt will affect economic growth, it would be just temporary.

“I am confident that steps to combat leakages and development projects will contribute to economic growth and the people’s well-being,” he said.

Putrajaya will table Budget 2019 next month.

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