Budget deficit would have been 6.7%; 2015 2.5% deficit target a lost cause
Based on the Economic Report, the Government was able to keep its deficit below 5% at 4.7% for 2012 only because of an unbudgeted increase in revenue by RM21 billion for the year. If not for the above, based on the Government’s expenditure in 2012, our deficit would have increased to 6.7%.
The Government has announced its plan in the 2013 budget to keep the deficit at 4.0%. However, it has become clear that the Government’s original target as late as 2011 to reduce our deficit to 2.5% by 2015 is no longer achievable. The steep decline of growth in the government’s revenue will make the task seemingly impossible.
No political will
The budget demonstrates no political will on the part of the Federal Government to make the necessary structural changes to the way we manage our budget. We see a decline in the proportion of funds spent on development expenditure. We also do not see a serious effort to tackle federal government debt, both “official” and “hidden”.
The 2013 Budget reads like a repeat of prior year budgets, using the same formula without taking into consideration the changing circumstances and increasing economic challenges we face today.