Professional Documents
Culture Documents
INTERNAL
Presentation Outline
Part I : Background 3
Part II : Fiscal Policy Institutions 6
Part III : Annual Budget Preparation 10
Part IV : Fiscal Challenges & Initiatives 13
Part V : Conclusion 17
2
PART I
Background
Fiscal Policy
Objectives Fiscal instruments
1 Revenue 4 PPP
Development • Macroeconomic Stability
Agenda & 2 Expenditure 5 Government Guarantee
• People’s quality of life
People’s
• Business & investor friendly
Welfare 3 Debt 6 SOEs
Related regulations
Financial Procedure Act 1957
Revenue Expenditure Debt and Borrowing Others
• Income Tax Act 1967 • Development Fund • Loan (Local) Act 1959 • Minister of Finance
• Sales and Service Tax Act 1965 • Government Funding (Incorporated) Act
2018 Act 1983 1957
• External Loan Act • Loans Guarantee
1963 (Bodies Corporate)
• Treasury Bills (Local) Act 1965 (Revised
Act 1946 1972)
• Housing Loan Fund
Act 1971
4
Charting the New Malaysia
5
PART II
Fiscal Policy Institutions
Who manages & formulates fiscal policy?
Fiscal Policy
Ministry of Finance
MOF
Treasury of Malaysia
8
Fiscal Rules
Fiscal Governance and Reporting Federal Government Balance (% of GDP)
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018P 2019E
0
1 Federal Constitution
-1
-1 -0.9
-1.1
2 Financial Procedure Act 1957 -1.3 -1.2
-2 -1.7 -1.6
-2.3
3 Loan (Local ) Act 1959 -3 -2.7
-3.1 -3
-3.2
-3.4 -3.4 -3.4
-4 -3.8 -3.7
4 Government Finance Statistic Manual
-4.3
-5 -4.7 -4.7
-7 -6.7
Fiscal indicators
Fiscal rules Legislative / Statutory Guidelines Administrative
Current balance always in
Borrowings are only to finance surplus to ensure operating
Loan (Local) Act 1959
development expenditure expenditure is financed by
revenue
Domestic debt ceiling Not exceeding 55% of GDP
(MGS, MGII, MITB) Loan (Local) Act 1959 and Government Funding Act 1983
Not exceeding RM35 billion
Offshore borrowing ceiling Self-imposed limit of 55% of GDP
External Loans Act 1963
Not exceeding RM10 billion
Issuances of conventional Treasury bills
Treasury Bills (Local) Act 1946
Allocation for debt service charges are charged items and not
DSC ≤ 15% of revenue or
Limit of debt service charges (DSC) required to be tabled to Parliament
operating expenditure 9
Federal Constitution Article 98 (1)(b)
PART III
Annual Budget Preparation
Budget Preparation Process
11
Core players for budget preparation
12
PART IV
Fiscal Challenges and Initiatives
Responsible & Progressive Fiscal Reforms
15
FRA Framework
Optional Essential
Medium-term path
(transparency of fiscal
policy intentions)
Medium-term and
annual budget
Existing fiscal policies
strategy (policies to
versus new measures
support fiscal
stability)
Components of
Debt sustainability FRA Regular reports
analysis
16
PART V
Conclusion
Conclusion
▪ Although, the initiatives have proven fruitful, the dynamic of global economic
environment requires Malaysia to be alert and proactive of changes which pose a
fiscal risks.
▪ What more important is to increase the efficiency and the effectiveness of the
spending (quality spending) to achieve the economic objectives.
18
THANK YOU