by BERNAMA / pic by TMR FILE
THE government has revised the Medium-Term Fiscal Framework (MTFF) 2021-2023 on account of the impact caused by the COVID-19 crisis, the Finance Ministry said in its 2021 Fiscal Outlook and Federal Government Revenue Estimates report released today.
The updated macroeconomic and fiscal assumptions have been revised to include real gross domestic product (GDP) growth of between 4.5 per cent and 5.5 per cent, crude oil prices between US$45 (RM187) and US$55 (RM228) per barrel and crude oil production of 580,000 barrels per day.
The MTFF is an important tool for fiscal policy management, it promotes fiscal discipline, ensures appropriate resource allocation and forecast beyond the annual planning horizon.
In the medium-term period, the ministry said total revenue is expected to reach RM731 billion or 14.7 per cent of GDP, contributed mainly from non-petroleum revenue, which is forecast at RM609.7 billion or 12.3 per cent of GDP.
Petroleum-related revenue is projected at RM121.3 billion or 2.4 per cent of GDP.
“The government will enhance its revenue by exploring new sources, widening the revenue base, improving tax administration and adopting the Medium-Term Revenue Strategy (a high-level roadmap of tax system reform),” the ministry said.
The total indicative ceiling for the three-year expenditure is estimated at RM959.8 billion or 19.3 per cent of GDP, including swift implementation of economic stimulus packages and recovery plan under the COVID-19 Fund.
It said operating expenditure allocations are projected at RM730.3 billion or 14.7 per cent of GDP, while development expenditure is RM212.5 billion or 4.3 per cent of GDP.
“This indicative ceiling provides a comprehensive guide to ministries and agencies in budget planning, to ensure a more targeted and disciplined fiscal management,” it said.
The ministry said the overall fiscal deficit is targeted to average 4.5 per cent of GDP for the three years, while Federal Government debt is expected to increase, albeit at a manageable level.