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Main points of the Fiscal Report for 2020 and 2021
Federal Government Expenditure for 2021
* RM322.5bil or 20.6% of GDP for the 2021 budget where RM236.5bil of 73.3% for operating expenses, RM69bil or 21.4% for development expenses, RM17bil (5.3%) for the Covid-19 fund.
* Sector allocation excluding the Covid-19 fund, 37.7% for programs in the social, economic (18.3%), security (11%) and general administration (7.7%) sectors.
* Budget balance of RM 77.4 billion (25.3%) for charged expenses and transfers.
* Operating expenses allocated RM 236.5 billion out of 15.1% of GDP, 4.3% more than the revised budget of RM226.7 billion.
* The Ministry of Education allocated 16% of Operating Expenses to the repair and maintenance of school facilities.
* Subsidies and social assistance – including subsidies for goods and services, incentives, to fall by 6.4% to RM18.9 billion.
Development spending of $ 69 billion, 38% more than in 2020 to support economic growth, provides a better quality of life and a better living environment.
* Of the RM69bil, RM67.3bil will be direct allocation and RM1.7bil for local governments to state and government-related entities.
Federal government revenue in 2021
* Federal government revenue is expected to increase by 4.2% to RM236.9bil or 15.1% of GDP due to improved economic growth and business prospects.
* Tax revenue collection is expected to increase by 13.8% to RM174.4 billion.
* Tax revenues constitute 11.1% and non-tax revenues 4%, as a percentage of GDP.
* Direct tax collection is expected to increase by 14.6% to RM131.9 billion or 55.7% of total revenue, largely due to corporate income tax, income tax of petroleum and the tax on the income of the natural persons.
* Indirect tax collection recovered 11.4% to RM42.5bil, mainly due to higher SST collection. SST collection for 2021 is expected to increase by 13.7% to 27.9 billion due to higher consumer spending.
* Non-tax income will decrease by 15.5% to RM62.5 billion in 2021, mainly due to lower investment income. Petronas and Khazanah dividends are estimated at RM18bil and RM1bil.
Fiscal deficit, spending, fiscal stimulus
* The fiscal deficit of the federal government will increase by 6% of GDP in 2020
* Public sector debt rose to RM1.23 trillion or 85.5% of GDP at the end of June.
* Federal Government Debt RM 854.1 billion or 69.4% of total debt, non-financial public companies (NFPC) at 24.4% and statutory bodies at 6.2%. The debt of the NFPCs amounted to 300.4 billion ringgit.
* In 2021, gross debt is around 11% of GDP.
* In 2021, the federal government debt will increase to around 61% of GDP.
* By 2020, the revenue shortfall will be approximately 20% of budget estimates. Total revenue will be less than RM227.3 billion or 15.8% of GDP against budget estimates of RM244.5 billion.
* Total spending will increase by 6% or RM17.7bil to RM314.7bil compared to initial estimates of RM297bil.
* Net increase due to the injection of fiscal stimulus of RM39 billion but offset by savings of RM20.3 billion.
* Operating expenses will be reduced by 5.9% to RM226.7 billion from original estimates of RM241 billion.
* Development expenditures will decrease 11% to $ 56 billion.
Federal government revenue in 2020
* Federal government revenue in 2020 will fall by 14% to RM227.3 billion from RM264.4 billion in 2019 due to lower tax collection.
* Tax collection is the main contributor to federal government revenue at RM153.3bil or 67.4% of total revenue.
* Direct tax, which accounts for 50.6% of total revenue, will fall 14.6% to $ 115.1 billion from $ 134.7 million in 2019.
* Corporate income tax (CITA) will fall to $ 59.4 billion from $ 63.7 million in 2019. Original estimate of $ 75.5 million.
* The personal income tax will be reduced by 4% to RM35.9bil from RM37.4bil before.
* Oil income tax will drop 58.9% to RM8.5bil from RM20.8bil in 2019.
* Indirect tax at 16.8% of total income, to fall by 19.4% to RM38.1bil from the previous RM47.3bil.
* Sales tax and service tax (SST) will be lower by $ 24.5 million compared to $ 27.7 million in 2019.
* Excise duties will be reduced by 19.1% to RM8.5 billion from RM10.5 billion in 2019, as crude oil prices average 40 US dollars.
* Non-tax revenue will decline to $ 74 billion from $ 83.8 billion, primarily due to higher dividends from Petronas of $ 34 billion.
* Oil related revenue will drop by 40.3% to RM50bil in 2020 from RM83.8bil in 2019. Non-oil related revenue will decrease to 1.8% to RM177.3bil from RM180.6bil in 2019.
Federal Government Expenditure for 2020
* The total federal government spending allocation for 2020 increased to RM314.7bil from the initial budget estimate of RM297bil.
* The increase of RM17.7 billion due to the injection of RM38bi fiscal stimulus, spending savings of RM20.3 billion.
* Approximately 55% or RM11 billion savings due to shortfall in development spending.
* Operating expenses decreased by 5.9% or RM14.3bil to RM226.7bil from the initial RM241bil.
* Development expenses were reduced to RM50bil from the original RM56bil (RM54.2bil in 2019).
* The economic sector represents 57.1% of development spending, the social sector 26.1%, the security sector 11.1% and the general administration 5.7%.
* Allocation of RM28.5bil, mainly to improve the infrastructure of communications connectivity and public transport, improving public services.
* The transportation sector gets RM10.2bil, mainly for Pan Borneo Highway, electrified double track project, MRT 2 and Klang Valley Double Track Phase one, infrastructure and system upgrades.
* General spending for the social sector will decrease by 9.8% to RM13.1 billion in 2020.
* Covid-19 Fund saw a tax injection of RM45bil
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