THE government remains committed to maintaining the fiscal deficit at 3.1 per cent of gross domestic product (GDP) this year.
The 2016 Budget Recalibration exercise was necessary to ensure that the fiscal target remains on track.
The Economic Report 2016/2017 said it was a pre-emptive measure in response to the significant decline in government revenue following the drop in oil price.
The oil price hit an all-year low of US$26.39 (RM110.31) per barrel in January this year.
The report said with the additional 11 new measures in the 2016 Budget and the nation’s strong economic fundamentals, the GDP would remain on the four per cent to 4.5 per cent trajectory this year.
The Fiscal Policy Committee set up the fiscal risk and contingent liability technical committee in May to evaluate the government’s fiscal risks and contingent liabilities as well as come up with appropriate measures.
The monetary policy remains consistent towards achieving price stability and sustainable growth.
During the same period, the ringgit advanced against most major and regional currencies amid monetary easing measures in major economies and improvement in global crude oil prices.
On the 2016 Budget, the report said the “Prospering the Rakyat” theme prioritised on strengthening economic resilience, increasing productivity, innovation and green technology, empowering human capital, advancing Bumiputera agenda and easing the cost of living of the rakyat.
A total of RM265.2 billion was allocated for the year, of which 81.1 per cent or RM215.2 billion was operating expenditure and the remaining 18.9 per cent or RM50 billion for development expenditure.
With the significant drop in crude oil prices, the expenditure envelope was revised downwards to RM252.1 billion and of this, RM207.1 billion (82.2 per cent) and RM45 billion (17.8 per cent) were allocated for operating expenditure and development expenditure, respectively.