KUALA LUMPUR, Oct 29 (Bernama) — Given the need to ensure a durable recovery, the government will allocate RM332.1 billion for the 2022 Budget, focusing on three main objectives — to sustain and spur economic activities, rebuild economic resilience and catalyze the reform agenda, the Ministry of Finance said.
It said the recovery momentum is expected to gain traction in 2022 in line with the steady progress of the vaccination program bolstered by the implementation of the National Recovery Plan (NRP) while the recently announced 12th Malaysia Plan would be the catalyst to revitalize the economy, promote investments, accelerate digitalization and strengthen the civil service.
“The government will continue its expansionary fiscal stance to steer the country to its potential growth trajectory. A total sum of RM332.1 billion (20.3 per cent to GDP) will be allocated in the 2022 Budget.
“Of this amount, RM233.5 billion (70.3 per cent) will be channeled to operating expenditure (OE), RM75.6 billion (22.8 per cent) for development expenditure (DE) and the balance of RM23 billion for the COVID-19 Fund,” it said in its 2022 Fiscal Outlook and Federal Government Revenue Estimates report released today.
It said the RM233.5 billion OE allocation is 6.3 per cent higher compared with the 2021 revised allocation of RM219.6 billion with emoluments, debt service charges and retirement charges remained the top three recipients constituting 67.5 per cent of the total OE or 9.6 per cent to gross domestic product (GDP).
The ministry said in terms of sectoral allocation, RM133.2 billion or 40.1 per cent of the total 2022 Budget would be allocated for programs and projects under the social sector followed by economic (20.3 per cent), security (10.3 per cent) and general administration (4.8 per cent) sectors.
It said the remaining balance amounting to RM81.3 billion (24.5 per cent) would be allocated for charged expenditure and transfer payments.
In 2022, it said the Federal government is budgeted to provide loans totalling about RM2 billion via DE to state governments, companies, statutory bodies and other organizations while loan repayments are estimated at RM600 million with half of the total to come from state governments — Sabah, Sarawak and Selangor.
The ministry said as Malaysia enters the second year of the 12th Malaysia Plan (12 MP), DE for 2022 would continue to be distributed to projects and programs with a high multiplier impact to reinvigorate economic growth, create a conducive investment climate and safeguard the well-being of the rakyat.
“Thus, an allocation of RM75.6 billion will be allocated for DE (2021: RM62 billion) and of the total, RM66.9 billion is allocated for 5,575 ongoing projects.
“The economic sector remains the largest recipient at 53.2 per cent of DE, followed by social (30 per cent), security (11.9 per cent) and general administration (4.9 per cent) sectors,” it said.
MoF said another recipient under the economic sector is the trade and industry subsector, with an allocation of RM2.1 billion and among the programs under this subsector are for strengthening entrepreneurial capabilities, including micro small and medium enterprises in line with the National Entrepreneurship Policy 2030.
“The government will continue to play its role in mitigating the impact of the COVID-19 pandemic on the people, businesses and economy. Its immediate priority is to provide adequate support for the implementation of the NRP, accelerate economic growth and lead the country out of the economic and health crisis.
“Any withdrawal of fiscal injection will depend on the pace of recovery to ensure the economy returns to its growth trajectory but nevertheless, initiatives to enhance effective and efficient spending will be pursued.
“The government remained committed to upholding transparency and accountability in its public finance management,” it said.
To recap, the federal government’s total expenditure for 2021 was budgeted at RM322.5 billion.
However, during the year, a series of four assistance and economic stimulus packages, namely Perlindungan Ekonomi dan Rakyat Malaysia, Strategic Program to Empower the People and Economy Plus and National People’s well-Being and Economic Recovery Package totalling RM225 billion with a fiscal injection of RM25 billion.
The additional stimulus and containment measures have put pressure on revenue which is projected to be lower than budget estimates.
Hence, the federal government’s total expenditure for 2021 was revised downwards to RM320.6 billion, albeit higher than total spending in the previous year (2020: RM314 billion).
The year 2022 also saw Malaysia entering its second year of 12MP, whereby a sum of RM400 billion was allocated for DE, which is a significant increase of 61 per cent compared to the actual expenditure of RM248.5 billion for the 11MP.