Highlights of Malaysia's expansionary 2021 budget

Malaysia's government announced an expansionary budget aimed at spurring domestic activity on Nov 6, 2020.
Malaysia's government announced an expansionary budget aimed at spurring domestic activity on Nov 6, 2020. PHOTO: AFP

KUALA LUMPUR (REUTERS) - Malaysia's government announced an expansionary budget on Friday (Nov 6) aimed at spurring domestic activity as the country grapples with the fallout from the Covid-19 pandemic, setting aside concerns of a growing fiscal deficit for the time being.

Here are some highlights from the planned budget, including data from the fiscal and economic outlook reports released by the government ahead of the budget speech.

- Expenditure to rise to RM322.5 billion (S$105.1 billion) in 2021 from RM314.7 billion in 2020

- Revenue to total RM236.9 billion versus RM227.3 billion in 2020

- Operating expenditure seen at RM236.5 billion

- Development expenditure seen at RM69 billion

- Covid-19 fund allocation seen at RM17 billion versus this year's RM38 billion

- Dividend from state oil firm Petronas at RM18 billion, down from this year's RM34 billion.

Fiscal targets

- Fiscal deficit to fall to 5.4 per cent in 2021 from 6 per cent in 2020 - the highest since 2009 global financial crisis

- Current account surplus seen falling to RM20.3 billion in 2021 from this year's RM48.5 billion due to an expansion of domestic industrial and investment activities

- Forecasts fiscal deficit to average 4.5 per cent between 2021 and 2023, assuming the economy grows at a pace of 4.5 to 5.5 per cent a year over the period and crude oil prices trade at US$45-US$55 per barrel.

Economy

- Economy seen growing 6.5 to 7.5 per cent in 2021, after shrinking 4.5 per cent this year

- Gross exports to grow 2.7 per cent after falling 5.2 per cent in 2020

- Inflation expected to normalise at 2.5 per cent in 2021

- Unemployment rate to drop to 3.5 per cent in 2021 from 4.2 per cent this year

- Domestic demand seen rebounding 6.9 per cent in 2021, after an expected fall of 3 per cent this year due to lower.