KUALA LUMPUR: The government expects Malaysia’s current account to remain in surplus this year and not suffer from twin deficit.
Finance Minister Lim Guan Eng said Malaysia is definitely not in austerity mode as the government is committed to driving Malaysia’s long-term development.
“We are not going to just pursue fiscal consolidation at all costs. We must also recalibrate public finances towards a path of long-term fiscal sustainability,” he said.
Lim said the government is focused on smarter spending, while adopting a wider application of open tender for government procurements and projects.
“More savings will be gained when we retender out the infrastructure projects. We are currently reviewing a larger number of public-private partnership projects managed under the Public-Private Partnership Unit (UKAS),” he said.
He added the government’s current efforts at fiscal consolidation are focused on prudence – cutting out the excesses of the past while building a strong foundation for government finances.
“This is to pursue smart and responsible fiscal policy moving forward,” he said at the Khazanah Megatrend Forum 2018 Luncheon Adress here.
Lim said the administration has options in dealing with over RM1 trillion debt and other liabilities leveraging on Malaysian corporates, which have the capacities on its balance sheets to invest and pursue growth.
“Malaysian corporate debt — at least among the listed companies — is merely 20 per cent of gross domestic product (GDP),” he said.
Although returns may have flattened, Lim said the corporate sector has a prominent role in helping to keep the economy going.
“In the short-term, we have to consolidate our fiscal position in order to address the excesses of the previous government. The first step is to lay bare the actual fiscal position of the nation’s revenue, expenditure and liabilities,” he said.
Lim said the new government would put in place some additional institutional checks-and-balances for its finances as part of the overall institutional reforms, while preparing the upcoming 2019 Budget .
“For example, the newly-formed Public Finance Committee is tasked to outline government medium-term fiscal plans to balance out needs for fiscal consolidation and need for the government to spend for future economic growth,” he said, adding that the government has set up a Tax Reform Committee to make the country’s taxation system efficient, neutral and progressive.