budget deficit

 
 

SST reintroduction to lead to tiny price hikes: Economist

KUALA LUMPUR: The reintroduction of the Sales and Services Tax (SST) in September is likely to lead to tiny price increases in the country, lifting the Consumer Price Index (CPI) to 1.7% in 2019 from the projected 1.5% in 2018.

RHB Research Institute Sdn Bhd Chief Asean Economist Peck Boon Soon said businesses would have to build in the cost from SST and slightly increase their prices.

“I am not quite sure how businesses will react to SST, whether they will be more restrained in raising their prices or not.

“But I believe there will be some slight increases as generally, businesses will try to raise their prices every year to cover the cost of doing business, which keeps on rising,” he told Bernama.

Finance Minister Lim Guan Eng announced on Monday that under the reinstated SST, the provision of services would be taxed at 6% while the sales of goods would incur a 10% tax – similar to those implemented before the Goods and Services Tax (GST) came into play on April 1, 2015.

He said the SST Bill was expected to be passed in August during the current Parliamentary seating, and would be implemented in September.

Asked if the return of SST would lead to higher inflation in the country, Peck said the impact would only be seen next year, when the CPI was expected to edge up slightly to 1.7% from the 1.5% expected for 2018.

“The headline inflation projections for both 2019 and 2018 would still lower than the 3.8% recorded last year,” he said.

He noted that previously, inflation rates in Malaysia were mainly influenced by three factors, namely fuel prices, exchange rates and GST.

“The impact of GST on inflation rates seems to be greater, which by right should not be the case,” he said.

However, Peck said the rate of 6% for services and 10% for goods were in line with market expectations, as it had been widely reported that the Pakatan Harapan-led government was looking at the old tax law – the Service Tax Regulations 1975 – after taking over the helm from Barisan Nasional.

Therefore, he did not foresee the mild inflation curbing consumer spending in the country and maintained the 2018 gross domestic product (GDP) growth at 5.2% as forecast by RHB Research in December last year.

Meanwhile, Peck also believed that the government would be able to fulfil its promise of achieving the budget deficit target of 2.8% of GDP for 2018.

“The government has no other option but to fulfil the promises, and the market is expecting it to maintain the target at 2.8%,” he said.

Earlier, Lim was reported as saying that he expected the Federal Government to still be able to meet the 2.8% target despite the expected RM17 billion loss in revenue with the shift from GST to SST. — Bernama


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Saudi economy escapes recession in first quarter

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1MDB debt costs may reach RM34.6b, says Maybank

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KUALA LUMPUR: Malaysia’s costs of servicing 1MDB debt may reach as much as RM34.6bil (US$8.6bil) from 2019 to 2023, as the government will probably fully account for it, according to Maybank Kim Eng Securities. Full crystallisation of 1MDB’s debt has become highly likely, analysts Winson Phoon and Se Tho Mun Yi wrote in report Monday. Debt service, both coupon and principal repayment, estimated at RM1.7bil in 2019, RM1.7bil in 2020, RM2.7bil in 2021, RM15.4bil in 2022 and RM13.1bil in 2023. Other options include buying back USD bonds from the openRead More


US government posts US$147b deficit in May

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Argentina and IMF agree on US$50 billion loan

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Finance minister: Fiscal deficit up to RM40.1b, budget deficit stays at 2.8pc of GDP

PUTRAJAYA, May 31 — Malaysia’s fiscal deficit is projected to increase to RM40.1 billion from RM39.8 billion, thus maintaining a budget deficit of 2.8 per cent of gross domestic product (GDP) for 2018, Finance Minister Lim Guan Eng said. He said…


Malaysia will meet budget deficit 2.8% with rationalised expenditure and optimised revenue

PUTRAJAYA: Malaysia will meet its projected budget deficit of 2.8% this year with a rationalised expenditure and optimised revenue, said Finance Minister Lim Guan Eng.

“As part of the reallocation of expenditure priorities, the new federal government will review, defer and renegotiate at least RM10 billion worth of identified high-priced projects,” he told reporters at a press conference today.

The ministry expects additional revenue from higher oil price, dividends from government linked companies and implementation of the Sales and Services Tax (SST) in September.

“The projected fiscal deficit will increase from RM39.8 billion to RM40.1 billion, which would maintain the federal government budget deficit at 2.8% of the GDP. In addition, the government's current balance will also remain positive,” Lim said.


Malaysia will meet deficit target with rationalised expenditure and optimised revenue

PUTRAJAYA: Malaysia will meet its projected budget deficit of 2.8% this year with rationalised expenditure and optimised revenue, said Finance Minister Lim Guan Eng.

“As part of the reallocation of expenditure priorities, the new federal government will review, defer and renegotiate at least RM10 billion worth of identified high-priced projects,” he told reporters at a press conference today.

These expenditures include projects that were awarded via direct negotiation or a limited tender exercise, non-essential operating expenditure, big-ticket budget allocations and other items such as special projects under the Internal Coordination Unit.

Lim said the government would save billions of ringgit when these projects are either retendered or scrapped.

In terms of optimised revenue, the ministry expects additional revenue from higher oil price, higher dividends from government-linked companies (GLC) and implementation of the Sales and Services Tax (SST) in September.

The rise in oil price from the US$52 per barrel used in Budget 2018 to the current US$70 (RM279) will result in an estimated RM5.4 billion additional revenue, which will come from corporate and petroleum income taxes.

There will also be an estimated RM5 billion as a result of higher dividends from GLCs while the SST will result in an estimated RM4 billion.

“The projected fiscal deficit will increase from RM39.8 billion to RM40.1 billion, which would maintain the federal government budget deficit at 2.8% of GDP. The government's current balance will also remain positive,” Lim said.

Asked whether the ministry will remove the previous government's appointees from GLCs, he said: “I think it is only fit and proper that they do the right thing … the sooner the better.”

On the possibility of listing Petronas, Lim said the proposal has not been put forward to the federal government.

Lim also confirmed that the ministry has made a RM143.75 million payment that was due from 1MDB to Abu Dhabi-based International Petroleum Investment Co on Wednesday.

On whether the Tun Razak Exchange project will continue, Lim said the commitments that have been entered into will be honoured but some of the terms will need to be renegotiated.

On whether the ministry will call for a new budget to replace the previous government's Budget 2018, he said it is possible and likely.

Lim said some measures under Pakatan Harapan's first 100 days promises will only be implemented when the financial situation improves but stressed that it is committed to fulfilling them.


Italy central bank says confidence at risk if debt not reined in

ROME, May 29 — The head of Italy’s central bank sent a thinly veiled warning to the country’s anti-establishment parties today, saying any moves to weaken the country’s public finances could undermine confidence and unwind years of economic…