Govt confident of keeping 2018 fiscal deficit at 2.8%

Lim downplays the notion of listing Petronas as mere speculation

By ALIFAH ZAINUDDIN / Pic By ISMAIL CHE RUS

THE government is confident that it can maintain the budget deficit at 2.8% this year amid plans to scrap the Goods and Services Tax (GST) and review several mega projects.

Finance Minister Lim Guan Eng (picture) said yesterday the government plans to meet the target through various rationalisation exercises of its federal expenditure and optimising its revenue sources.

As part of the expenditure reallocation measures, the government is expected to review, defer and renegotiate at least RM10 billion worth of high-priced projects. These include projects which were awarded through direct negotiations and mega projects such as the high-speed rail (HSR) and the Mass Rapid Transit Line 3 (MRT3).

Lim said in the longer term, the government would save “billions of ringgit” if these projects were re-tendered or shelved altogether.

“We will honour those commitments which are ongoing, but I think there need to be a renegotiation on some contracts. For the benefit of the country, some of these terms have to be reconsidered,” he told reporters at a briefing in Putrajaya yesterday.

Apart from a leaner expenditure, the government is also banking on an estimated RM5.4 billion in oil-related income following the rise of global oil prices from the US$52 (RM207.60) per barrel estimated in Budget 2018 to the current US$70 per barrel.

Some RM5 billion in dividends are also expected from government-linked companies such as Khazanah Nasional Bhd, Bank Negara Malaysia and Petroliam Nasional Bhd (Petronas), on top of the RM4 billion estimated from the reintroduction of the Sales and Services Tax in September.

“In other words, the projected fiscal deficit will increase from RM39.8 billion to RM40.1 billion, which would maintain the federal government budget at 2.8% of the gross domestic product. In addition, the government’s current balance will also remain positive,” Lim said.

He added that the federal administration’s efforts to zero-rate the GST, stabilise fuel pump prices and offer RM700 million worth of Hari Raya assistance to civil servants and pensioners will lead to improved consumer optimism and business profits.

When asked if the government would consider a listing exercise of state-owned oil and gas company Petronas, Lim downplayed the notion as mere speculation.

“It has not been put forward by the federal government. I am now more focused on cost centres,” he said.

Separately, Lim confirmed that the Ministry of Finance (MoF) has paid a RM143.75 million bond coupon on behalf of scandal-plagued state investment fund 1Malaysia Development Bhd (1MDB) that was due on Wednesday.

“We have settled that. I have signed it very reluctantly, but the payment has been made.”

Lim had earlier made public of 1MDB’s insolvency after the company declared its inability to repay its debt. The government has said it will honour 1MDB’s debt obligation as it had done so since April 2017.

To date, MoF has paid RM7.12 billion on behalf of 1MDB. Another RM810.21 million worth of interests is due between September and November 2018.