6 November, KUALA LUMPUR – The Malaysian government is allocating RM322.5 billion, or 20.6 per cent of the Gross Domestic Product (GDP), for Budget 2021.
This is an increase from its total expenditure allocation for 2020, which has been revised upwards to RM314.7 billion from the initial budget estimate of RM297 billion.
In the Fiscal Outlook and Federal Government Revenue Estimates 2021 report released today, the Finance Ministry said of the total 2021 budget, RM236.5 billion (73.3 per cent) will be channelled to operating expenditure (OE), RM69 billion (21.4 per cent) to development expenditure (DE) and RM17 billion (5.3 per cent) to the COVID-19 fund.
“The allocation for OE is estimated to be higher at RM236.5 billion or 15.1 per cent of GDP in 2021. Compared to 2020, the amount is slightly higher by 4.3 per cent from the revised (OE) budget of RM226.7 billion,” it said.
Emoluments remain the largest component, constituting 35.7 per cent of the OE.
“The component is expected to increase to RM84.5 billion (from RM82.6 billion in 2020), contributed mainly by the annual salary increment for civil servants. Retirement charges are estimated to increase by two per cent to RM27.6 billion, representing 11.7 of the OE,” it said.
A sum of RM39 billion is allocated for debt service charges in 2021, of which 97.7 per cent is allocated for the payment of coupons on domestic debts while the balance is for offshore loans.
In tandem with economic recovery, the DE will continue to be channelled to programmes and projects with high multiplier impact to promote economic growth and support the livelihood of the rakyat, the ministry said.
“The RM69 billion allocated in 2021, an increase of 38 per cent from 2020, is to support economic growth and provide a better quality of life and living environment through the implementation of new and ongoing programmes and projects, mainly in the areas of education, healthcare, housing, transportation and public utilities,” it said.
Of the total DE, RM67.3 billion is in the form of direct allocation, while RM1.7 billion is for loans to state governments and government-linked entities.
In terms of allocation by sector, the economic sector remains the largest recipient at 56.4 per cent of DE, followed by social (26.7 per cent), security 11.2 per cent and general administration 5.7 per cent.
The allocation for the economic sector is at RM39 billion, from RM28.5 billion in 2020 in line with the efforts to drive and enhance the growth of the economy. The main focus is transportation, trade and industry as well as energy and public utilities-related projects.
“The transport sub-sector accounts for the largest share at 21.8 per cent of total DE or RM15 billion. Projects under the sector include upgrading, expansion and maintenance of highways, roads, railways, bridges, ports and airports such as the construction of the Gemas-Johor Bahru Electrified Double Track, Pan Borneo Highway, KVDT1 (Klang Valley Double Tracking), Rapid Transit System as well as the expansion of the Kuantan Port and airport in Sandakan,” it said.
Expenditure for the social sector, amounting to RM18.4 billion or 26.7 per cent of total DE, is the second-largest component in DE. Of this, about RM8.9 billion is allocated for the education and training sub-sector to provide better education facilities.
The health sub-sector remains as a priority sub-sector with an allocation of RM4.7 billion (6.8 per cent of total DE), with spending focused on expanding the health sector and providing an effective national healthcare system.
“More new hospitals and clinics will be built, especially in small districts to ensure affordable, equitable and accessible healthcare system,” it said.
On the upward revision of the 2020 budget, the Finance Ministry said the net increase of RM17.7 billion is derived from the fiscal stimulus injection estimated at RM38 billion and savings from expenditure amounting to RM20.3 billion.