Kuala Lumpur : Malaysia aims to almost halve its budget deficit in the next five years as the government cuts subsidies, widens the tax base and reduces expenses under a plan to make the economy more competitive. The ringgit rose.
"We can no longer rely on past strategies and approaches that had previously driven our economic growth," Prime Minister Najeeb Razzaq said in yesterday's 10th Malaysia Plan report. "Failure to transform the economy puts the nation at risk of relative decline, as many developing nations are fast catching up."
The country plans to cut the budget shortfall to 2.8 per cent of gross domestic product in 2015 from a revised estimate of 5.3 per cent this year, according to the five-year plan unveiled by Najeeb in Kuala Lumpur yesterday. It earlier projected a 5.6 per cent deficit for 2010. The reduction will come even as the federal government plans 230 billion ringgit (Dh253 billion) of development spending for 2011-15.
Narrowing the budget gap would help Malaysia, which sold debt overseas in May for the first time in eight years, avert the confidence crisis that has engulfed Europe as nations from Greece to Portugal struggle to contain deficits.
As the economy rebounds from last year's recession, Najeeb has announced plans to trim state subsidies for consumers and roll back policies favouring the country's biggest ethnic group.
