Govt to pursue expansionary fiscal operation in 2016: MIDF
Published on: Tuesday, October 13, 2015
Kuala Lumpur: The government is expected to pursue another expansionary fiscal operation in 2016, says Malaysian Industrial Development Finance Bhd (MIDF).This is amid heightened global risks and uncertainty relating to the situation in China, the emerging markets as well as US monetary policy stance. MIDF Group Managing Director Datuk Mohd Najib Abdullah said yet another challenging year is foreseen for China, which is still in a period of internal transition and adjustments.
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He added that emerging markets would remain vulnerable to the state of disequilibrium in the flow of international capital, mainly caused by the indecision of the US Federal Reserve over its interest rate policy."Consequently, the Budget 2016 is expected to strive to minimise external headwinds and focus on enhancing the domestic economy, by emphasising expenditure with a high impact multiplier and those that will elevate social welfare," said Mohd Najib in a statement Monday. MIDF expects more aggressive development spending, likely higher than the RM48.5 billion budgeted in 2015. It also anticipates a continued emphasis on important infrastructure projects, aimed at increasing the productive capacity of the economy.
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"The higher development budget may be allocated for agricultural and rural development, public utilities, trade and industry and education sectors," said Mohd Najib.He added that the group expects the government to uphold its fiscal probity after what can be described as a transition year in 2015.
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He said the deficit for 2015 might come in slightly higher than the 3.2 per cent target, but the government is expected to harness all options to ensure that the deficit incidence for next year, is kept within 3.0 per cent. "In order to meet the target of a balanced or near balanced budget by 2020, we expect the deficit to narrow in 2016, compared with that in 2015," he said.He added that the government's financial leverage is expected to be enhanced by the collection of the Goods and Services Tax, which amounted to RM7.57 billion in the first quarter of its implementation.The group expects gross domestic product growth for 2016 to be in the region of 5.0 per cent and that would ensure stability in government revenue, despite the setback in respect of petroleum-related income. Stay up-to-date by following Daily Express’s Telegram channel.
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