KUALA LUMPUR – A sum of RM393.8 billion or 19.9% of the gross domestic product is allocated for Budget 2024, with a large chunk of the amount going to three ministries – finance, education and health, collectively accounting for 42.3% of the total.
Out of the amount, RM303.8 billion or 77.1% is channelled to operating expenditure (OE), while the remaining RM90 billion is allocated for development expenditure (DE), the Finance Ministry said in its 2024 Fiscal Outlook and Federal Government Revenue Estimates report released today.
For 2023, the federal government’s total expenditure has been revised upwards to RM397.1 billion, equivalent to 21.5% of GDP, from the budget allocation of RM386.1 billion or 20.4% of GDP.
“For 2023, the revised OE is anticipated to increase by 2.5% to RM300.1 billion or 16.2% of GDP, predominantly due to higher subsidy outlays for electricity and cooking oil, cleaning and security services for schools as well as initiatives under the Madani Economy framework,” it said.
While acknowledging that meeting expenditure needs is going to be challenging due to external headwinds, the government remains committed to striking a balance between providing fiscal support to effect long-term structural changes and ensuring prudent public spending.
Dissecting the numbers, in terms of sectoral allocation for Budget 2024, the ministry said the social sector is allocated RM149.7 billion or 7.6% of GDP, followed by the economy (RM66.7 billion; 3.4%), security (RM40.1 billion; 2%) and general administration (RM16.9 billion; 0.9%) sectors.
The remaining balance of RM120.4 billion is budgeted for charged expenditures and transfer payments.
To continue supporting public sector consumption, the allocation for OE is budgeted at RM303.8 billion or 15.4% of GDP, according to the Finance Ministry.
“While there is a higher allocation for emoluments, debt service charges (DSC), retirement charges as well as supplies and services, the increases are offset by a lower subsidy allocation, causing only a slight increase in OE by 1.2% as compared to 2023,” the ministry shared.
Emoluments for civil servants remain the largest component, comprising 31.5% of OE, and are projected to expand by 4.8% to RM95.6 billion.
The growth is predominantly attributed to annual salary increments and new hires to fill critical positions, particularly in health and education.
Additionally, the allocation for subsidies and social assistance, accounting for 17.4% of OE, is projected to decrease by 17.9% to RM52.8 billion, primarily due to the gradual implementation of subsidy rationalisation programmes, mainly for fuel and electricity.
Of the total, about 60% is allocated for subsidies, while the remaining is for social assistance and incentives.
In addition, the social assistance programmes will be further strengthened via the establishment of a new centralised database to address both inclusion and exclusion errors.
Meanwhile, a sum of RM49.8 billion is allocated for DSC, which constitutes 16.4% of OE, primarily driven by the increase in the federal government debt.
“In tandem with the Madani Economy framework, the fiscal stance will continue to emphasise public expenditure efficiency and effectiveness as well as generating higher value for money while minimising leakages and wastages,” the Finance Ministry said, adding that this endeavour would be undertaken through fostering good governance and accountability on public finance. – October 13, 2023