2023 budget allocates RM372.3bn to continue substantial support to economy: MoF
KUALA LUMPUR: The 2023 budget continues to provide substantial support to the economy with a total allocation of RM372.3 billion or 20.5% of Gross Domestic Product (GDP).
Of this amount, RM272.3 billion or 73.1% will be allocated to Recurrent Expenditure (OE) and RM95 billion or 25.5% to Development Expenditure (DE), says the Ministry of Finance (MoF) .
In addition, the remaining RM5 billion is for outstanding payments of Covid-19 Fund commitments made in 2022, as stipulated in Section 8(1), of the Temporary Public Funding Measures (Sickness Sickness) Act 2020. coronavirus (Covid-19)).
“In terms of sectoral allocation, 37.2% (of the 2023 budget) is allocated to programs and projects under the social sector, followed by economy (19.5%), security (9.9%) and social sector. general administration (5.5%) sectors, and 27.9% is allocated to imputed expenditures and transfer payments.
“The top three beneficiaries of the 2023 budget are the Ministry of Finance (RM67.2 billion), the Ministry of Education (RM55.6 billion) and the Ministry of Health (RM36.1 billion) , accounting for 43.3% of total expenditure,” he said. said in its 2023 Federal Government Fiscal Outlook and Revenue Estimates report released today.
The Ministry of Finance said the allocation for OE is estimated at RM272.3 billion or 15% of GDP in 2023, which is slightly lower by 4.3% from the 2022 budget due to the reduction in the allocation for subsidies and social assistance following the expected moderation in commodity prices and the gradual establishment of a mechanism of targeted subsidies.
However, a higher allowance is provided for emoluments, pension costs, debt service charges (DSC) and grants to statutory bodies.
Civil servants’ emoluments remain the largest component, constituting 33.3 percent of the OE, the ministry said.
“The component is expected to increase by 4.9% to RM90.8 billion, mainly due to the provision of a special annual salary increase for civil servants as well as the absorption of contract staff into permanent positions. , especially in health and education services,” he said. said.
Meanwhile, pension expense is expected to rise by 1.4% to RM29.1 billion, or 10.7% of the OE total.
A total of RM21.9 billion or 75.3% of pension expense includes pension payments for around 958,700 retirees and beneficiaries, while the rest is mainly gratuities and cash allowances in lieu of leave accumulated.
“As Malaysia is now an aging nation under the United Nations (UN) definition, pension liabilities are expected to increase further. Therefore, the government is exploring options to effectively manage future pension liabilities.
“As stipulated in the Federal Constitution, DSC is a billed item that must be prioritized before all other EOs, and it is estimated that it will increase by 7% to RM46.1 billion alongside higher funding requirements. high for DE and Covid-19. Fund,” he said.
Of this amount, 98.4% is earmarked for the payment of coupons on domestic debt, in particular Malaysian Government Securities (MGS) and Malaysian Government Investment Issues (MGII), while the balance is for loans. offshore.
The CAD/revenue ratio is estimated at 16.9%, against the 15% threshold in line with international best practice.
The Ministry of Finance added that supplies and services, which accounts for 11.8% of total EO, is expected to decrease by 3.8% to RM32 billion, due to the government’s initiative to absorb the contract staff in the service, resulting in the shift from the allocation of supplies and services to emoluments.
Grant allocation to statutory bodies is expected to increase by 12.1% to RM15.1 billion.
Meanwhile, he also indicated that the Ministry of Health will receive the highest allocation for supplies and services (35%), mainly for the purchase of medical supplies and professional services as well as for repairs and the interview.
Subsidies and social assistance are expected to amount to RM42 billion, mainly for fuel and agriculture related subsidies; cash assistance and social assistance; toll compensation; as well as education-related aid.
Fuel subsidies are estimated to decline with the expectation of a lower global crude oil price in 2023, averaging USD 90 per barrel, as well as a gradual move towards targeted subsidies to ensure economic efficiency and equitable distribution of resources.
In addition, the government will continue to provide assistance to Bantuan Keluarga Malaysia to ease the financial burden of the low income group.
Meanwhile, the implementation of DE programs and projects is expected to gain momentum as the country enters the third year of the 12th Malaysian Plan (12MP).
Thus, a total of RM95 billion will be allocated in 2023 primarily to support economic growth and post-Covid-19 recovery, where allocations will be channeled to programs and projects with high socio-economic impact, in line with the UN sustainable development. Development Goals (SDGs).
The Government will also continue to provide an allowance to meet financial commitments and obligations related to Public-Private Partnerships (PPP)/Private Finance Initiative (PFI), primarily to repay the US$3 billion 1MDB bond maturing in March 2023. – Bernama