THE Malaysian government is allocating RM322.5 bil, or 20.6% 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 bil from the initial budget estimate of RM297 bil.
In the Fiscal Outlook and Federal Government Revenue Estimates 2021 report released today, the Finance Ministry said of the total 2021 budget, RM236.5 bil (73.3%) will be channelled to operating expenditure (OE), RM69 bil (21.4%) to development expenditure (DE) and RM17 bil (5.3%) to the COVID-19 fund.
“The allocation for OE is estimated to be higher at RM236.5 bil or 15.1% of GDP in 2021. Compared to 2020, the amount is slightly higher by 4.3% from the revised (OE) budget of RM226.7 bil,” it said.
Emoluments remain the largest component, constituting 35.7% of the OE.
“The component is expected to increase to RM84.5 bil (from RM82.6 bil in 2020), contributed mainly by the annual salary increment for civil servants. Retirement charges are estimated to increase by 2% to RM27.6 bil, representing 11.7% of the OE,” it said.
A sum of RM39 bil is allocated for debt service charges in 2021, of which 97.7% 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 bil allocated in 2021, an increase of 38% 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 bil is in the form of direct allocation, while RM1.7 bil 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% of DE, followed by social (26.7%), security 11.2% and general administration 5.7%.
The allocation for the economic sector is at RM39 bil, from RM28.5 bil 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% of total DE or RM15 bil. 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 bil or 26.7% of total DE, is the second-largest component in DE. Of this, about RM8.9 bil 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 bil (6.8% 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 bil is derived from the fiscal stimulus injection estimated at RM38 bil and savings from expenditure amounting to RM20.3 bil.
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