KUALA LUMPUR: More proactive measures will need to be taken to address the growing debt service charges (DSC), which is estimated to touch RM43.1 billion in 2022 compared with RM39 billion seen in 2021, MIDF Research said today.
The allocation for the debt services will take up a larger portion (or 18.5 per cent) of operating expenditure (OPEX), which has been on the rise over the years, MIDF Research said in a note.
It is estimated at 17.6 per cent in 2021 and was 15.3 per cent (RM34.49 billion) in 2020.
"We expect a more proactive measure will be taken to address the growing debt service charges because savings from the debt services can be redirected to a more productive and impactful spending plan," MIDF Research said in its note on Budget 2022 that was tabled in parliament yesterday.
The major factor that will push OPEX higher will be a rebound in the government's spending on supplies and services. The spending on supplies and services is expected to rebound and increase by 30.5 per cent in 2022 after a sharp decline of 20.7 per cent last year.
This will be driven mainly by the higher spending on medical supplies and payment for professional services. Other components, mainly emoluments and retirement charges which cover 49 per cent of OPEX, will also increase to cover increment in the annual salary and pension payouts.
For 2022, the federal government's revenue collection in 2022 is estimated to be higher at RM234 billion or 14.3 per cent of Gross Domestic Product (GDP), driven by the anticipated increase in tax revenue collection to RM171.4 billion and non-tax revenue to RM62.6 billion.
Similarly, total expenditure is budgeted to be slightly higher at RM332.1 billion or 20.3 per cent of GDP, attributed to higher OPEX at RM233.5 billion and development expenditure at RM75.6 billion.
The remaining RM23 billion is for the disbursement under the COVID-19 Fund.
The increase in OPEX is mainly due to supplies and services, debt service charges as well as emoluments. DE allocation will be mainly directed towards the implementation of programmes and projects under the 12th Malaysia Plan, including the Electrified Double Track Rail Gemas-Johor Bahru, Rapid Transit System Link and Pan Borneo Highway.
Improving fiscal space vital to tackle future crises
The government's commitment towards its medium-term fiscal consolidation in the Budget 2022 will help to improve confidence in fiscal management and space as it will provide greater flexibility for the economy during future crises.
Guided by the Medium-Term Fiscal Framework, the government's fiscal deficit is projected to fall to 5 per cent of GDP in 2022-2024, a slower decline compared to the projection during Budget 2021 because of the prolonged global health crisis which led to a wider fiscal deficit this year.
"We expect this medium-term fiscal target can be achieved, barring any unexpected events and crises which could derail Malaysia's growth trajectory and therefore require more fiscal support," it said.
Among others, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz also announced that the Fiscal Responsibility Act (FRA) will be tabled next year.
It is currently being drafted and will incorporate the feedback received from various parties following the issuance of the public consultation paper in September 2021.
The FRA's objective is to strengthen fiscal management, which will include focusing on all aspects of public sector finance from ensuring sustainable income, more productive and impactful spending plans, prudent management of government debts and managing risks to fiscal sustainability.
"With a more transparent and credible reporting of the fiscal management, we expect the introduction and compliance to the FRA will help to further enhance confidence in the public sector finance," it said.
-- BERNAMA
Bernama
Sat Oct 30 2021

The allocation for the debt services will take up a larger portion (or 18.5 per cent) of operating expenditure (OPEX), which has been on the rise over the years, MIDF Research said in a note. - PEXELS

Gaza Arab plan may involve up to $20 billion regional contribution, sources say
Arab states plan a Gaza post-war strategy to oppose Trumps proposal for US control and Palestinian displacement.

Lebanese search for dead in devastated villages as Israel withdraws
Hezbollah says Israel was still occupying Lebanese territory and put the onus on the Lebanese state to get Israeli forces out.

China promises Latin America 'trustworthy' ties as Trump lays out demands
Beijing looks to improve its foothold in a region historically under the US sphere of influence.

Major risks loom as Trump upends US Russia policy
Washington's approach changes dramatically with the initial meeting between US and Russian negotiators.

Pope Francis has double pneumonia, complicating his treatment, Vatican says
Doctors say a polymicrobial infection occurs when two or more micro-organisms are involved and can be caused by bacteria, viruses, or fungi.

Philippines' VP Duterte challenges impeachment before Supreme Court
Sara Duterte makes her first legal move to fight the case that could lead to her removal and lead to a lifetime ban from public office.

Motor racing - Hamilton steps out in red at unprecedented 10 team F1 launch
I feel so full of life, so much energy, because everything's new and I'm just focused on what is up ahead, Hamilton says.

UAE tells US' Rubio it rejects displacement of Palestinians
The UAE's stance matters as its one of four Arab nations that normalised ties with Israel during Trumps first term.

Taylor Swift wins recording artist of the year crown for fifth time
The megastar's "The Tortured Poets Department" record also topped four IFPI charts, the IFPI says.

More than $50 billion needed to rebuild Gaza, World Bank joint assessment says
Years of rebuilding work, including clearing unexploded ordinance and millions of tonnes of rubble lie ahead.

Malaysia’s AI data centre development to be impacted by recent US restrictions - Liew
Liew Chin Tong says the restrictions would not affect the development of the domestic data centre ecosystem as a whole.

Sweden's top court rejects Greta Thunberg lawsuit on climate action
A court cannot decide that the parliament or the government must take any specific action, the Supreme Court says.
![[COLUMNIST] Trump’s Gaza (pipe) dream [COLUMNIST] Trump’s Gaza (pipe) dream](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/https://img.astroawani.com/2024-10/51728873693_EMIR.jpg)
[COLUMNIST] Trump’s Gaza (pipe) dream
The Gaza plan is dangerous and counter-productive as it's merely another recipe for regional instability.

Sivasangari eyes new career-high in world rankings
After climbing to a career-best world number seven, national women's squash ace S. Sivasangari is determined to keep rising.

Outburst against Steven Sim: DAP will probe if there's a complaint - Loke
DAP secretary-general Anthony Loke says the disciplinary committee has not received any reports related to the incident so far.

US judge will not block Elon Musk from firing federal workers, accessing data
The case raises questions about Musk's apparent unchecked authority as a top deputy to President Donald Trump.

Dozens of false killer whales stranded on remote Australian beach
Rescue crews trying to save the majority of the large dolphins that survived the ordeal, according to authorities.

Trump restricts AP access over Gulf of Mexico issue
The AP, citing editorial standards, says it would continue to use the gulf's established name.

China to fly back 200 nationals rescued from Myanmar scam centres, Thai official says
This is part of a multinational effort to crack down on illegal online operations run from the region.

Somber Tiger Woods back in action in TGL loss to New York GC
Tiger Woods makes his first start since the death of his mother when he competed in a TGL match at Palm Beach Gardens.