02 Nov 2020 . News
MoF: Budget 2021 to be bigger than previous year’s

KUALA LUMPUR (Nov 1): Finance Minister Datuk Seri Tengku Zafrul has revealed that the allocation for Budget 2021 will be bigger than the RM297 billion Budget 2020, and that the government will not be cutting back on its development spending, which over the decade accounted for barely one quarter of the government expenditure in the past 10 years, or less in some years.

In an interview with Sinar Harian, the minister said the upcoming budget will also be more dynamic than the preceding one, given the current unpredictability of the Covid-19 pandemic.

While he did not confirm the quantum of the budget, he assured that the size will be bigger than Budget 2020 to create jobs and restart the economy.


A total of RM297 billion has been allocated for Budget 2020, comprising RM241 billion for operating expenditure and RM56 billion for development expenditure. Budget 2020 is the second largest budget since 2011 (see charts).

While foreseeing an expansionary budget as the government needs to be the economic growth locomotive, economists are wondering the size of the national budget for 2021 compared with the one in 2019 which was RM315.96 billion — one of the biggest, if not the biggest, in history. The sizable budget was due partly to the refund of goods & services tax and income tax. Petroliam Nasional Bhd (Petronas) declared a special dividend of RM30 billion that year to shoulder the financial burden.


“Budget 2021 is an expansionary budget. We have to increase the allocation for development because this will have a long-term impact [on the economy],” Tengku Zafrul was quoted as saying.

Citing the building of hospitals as an example, he said such a project could create more job opportunities and increase economic gains.

The country’s development expenditure (devex) has not been more than 26% of the public expenditure in the past 10 years. The highest devex allocation granted was in Budget 2018 amounted to RM59.1 billion. Since 2018, the devex has been above RM50 billion.


Emoluments usually have the lion’s share of the public expenditure. Other big items are debt service charges, supplies and services, and retirement charges.

Emoluments accounted for 27.8% of the public spending in Budget 2020, debt service charges 11.8%, supplies & services 13% and retirement charges 9.1%.

“We have to spend more but we will also have to cut down on wastage and leakages. For example, we have seen that the operating expenditure of the government has come down, as we no longer spend on events.

“There are many initiatives we can take to create savings, which can be reinvested to assist the rakyat and the economy,” he said.

He also gave examples of how other governments, like those in Europe, that survived the 2008 Global Financial Crisis by increasing their spending.

At the same time, however, the government needs to be prepared for any unforeseen circumstances, such as another resurgence of Covid-19 cases.

“We will have to see and implement what is best for this coming budget,” he said.

Meanwhile, Tengku Zafrul expects the economy to see recovery next year, although it will not return to the pre-Covid-19 trajectory, and therefore, the economy will need to be restarted from a fundamental level.

To date, the government has spent some RM55 billion in fiscal stimulus via the Prihatin, Prihatin SME, Penjana and Kita Prihatin packages, he said, making Budget 2021 “the fifth budget” this year.

Asked what would happen if the upcoming budget that will be tabled this Friday does not get approved, the minister said he hopes it will go through, as the government has had discussions with many quarters.

“This budget is focused on the rakyat and the business segment to spur the economy. I hope the MPs from all parties can unite and support this budget. It is a budget for all — not solely for the government,” he said.

The government has allocated a total of RM297 billion for Budget 2020, comprising RM241 billion for operating expenditure and RM56 billion for development expenditure.


Source : The Edge Market – 1 November 2020 (Sunday)