KUALA LUMPUR: Malaysia is unlikely to meet earlier targets it set for a balanced budget by 2020 and will need another two to three years to reach the goal, the country’s second finance minister said on Thursday.
The shift in the budget target follows comments by ratings agencies late last year that the Southeast Asian economy might struggle to meet its objectives in the stated timeframe due to a run up in spending.
“I don’t think by 2020 (the government) can achieve a balanced budget because if you do that, basically you will squeeze economic development,” second finance minister Johari Abdul Ghani said at a conference, adding the government will have to spend in order to stimulate the economy.
“We will try to extend it to 2022-23,” he said.
Johari reiterated projections stated previously that the fiscal deficit will be reduced to 2.8 per cent of gross domestic product this year from 3 per cent in 2017.
Prime Minister Najib Razak has been able to lower Malaysia’s fiscal deficit every year since taking power in 2009 and that has been significant for maintaining Malaysia’s investment-grade sovereign credit ratings. However, some analysts are concerned the increase in government spending will hinder the pace of deficit reduction going forward.
Najib, under pressure to shore up his government’s popularity, in October unveiled a budget aimed at winning votes in a national election that must be held by August.— Reuters
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