Malaysia budget targets post-pandemic recovery

Malaysia’s 2022 budget will prioritise economic recovery and post-coronavirus reforms, and ensure continuity of aid deployed to help businesses weather the economic impact of lengthy lockdowns, the finance ministry said on Tuesday.

The upcoming budget, scheduled for Oct 29, will address the long-term effects of the pandemic on public health and the economy.

“Overall, Budget 2022 will be drafted with the expectation that the economic situation will recover from the effects of the Covid -19 pandemic next year,” it said in a statement.

“Budget 2022 will also evaluate means to rebuild fiscal resilience that was affected by the high level of government commitments required to finance the stimulus packages and assistance to the people and businesses.”

Malaysia has rolled out hundreds of billions of ringgit in stimulus packages to spur activity in its trade-reliant economy. The central bank slashed its 2021 growth forecast twice this year.

The Southeast Asian nation has among the highest rates of coronavirus infection in the region with more than 1.74 million cases among its 32 million population.

It has grappled with some form of lockdown since May, with non-essential business shuttered and travel and movement restricted.

The finance ministry said it expects its fiscal deficit to widen to between 6.5% to 7% of gross domestic product this year due to continued spending required to support the gradual reopening of the economy.

The 2022 budget will also focus on strengthening public healthcare, enhancing digital infrastructure, rebuilding economic resilience and socio-economic reforms, it said.

It estimates a collection of 162.1 billion ringgit ($39.01 billion) in tax revenue this year, or 10.3% of GDP.

Revenue collection during the first half of the year was lower than expected with further collection expected to decline as the lockdowns hurt businesses, it added.