Fiscal Policy Committee Meets To Deliberate Medium-Term Fiscal Framework For Belanjawan 2024 Formulation

YAB Prime Minister and Minister of Finance, Dato’ Seri Anwar Ibrahim today chaired the Fiscal Policy Committee (FPC) to review the country’s latest economic development as well as the Government’s current fiscal position and medium-term fiscal projections in preparation for the upcoming Belanjawan 2024.

“In line with the anticipated slowdown in global growth and trade, the Malaysian economy is expected to moderate but still be within the Government’s growth forecast of 4% to 5% for 2023. Growth is largely driven by domestic demand, as demonstrated by the 4.2% growth recorded in the first half of 2023. We will continue to take a whole-of-government approach to support the growth momentum through swift and efficient implementation of measures outlined under Belanjawan 2023 and the Ekonomi MADANI framework,” said Dato’ Seri Anwar.

As an open economy, escalating external headwinds will pose risks to Malaysia’s economic growth. These challenges include uneven growth across and within regions such as the US and China, volatile financial markets due to tightening monetary policy, prolonged geopolitical tensions, and erratic weather conditions.

The Committee deliberated the projections of GDP growth, the Government's fiscal position, and medium-term fiscal framework for Belanjawan 2024 formulation. It recognised there is room to continuously improve the strategy, governance, and efficiency in managing the nation’s finances. This includes formulating strategies and initiatives to further strengthen the Government’s revenue management to ensure the sustainability of revenue mobilisation.

Concurrently, the Government will continue its effort to reduce wastages and leakages, while enhancing spending efficiency. Hence, fiscal consolidation measures will be implemented gradually in order to restore fiscal space while reducing the Government’s debt and liabilities level.

Dato’ Seri Anwar emphasised the importance of striking a balance between undertaking fiscal reforms and supporting economic growth while safeguarding the rakyat’s well-being.

“Even as we must undertake potentially difficult reforms to broaden the tax base and address leakages from blanket subsidies, we must recognise the cost of living challenges still faced by the rakyat that is compounded by the global economic uncertainties,” he explained.

“I have not wavered in my stand that fiscal reforms cannot forsake the less fortunate and must provide enough spending to spur economic activities and investments. Hence, the sequencing and extent of fiscal reforms need to be carefully considered so that they do not result in drastic shocks to the economy or the rakyat,” Dato’ Seri Anwar added.

The Committee unanimously agreed on the significance and urgency of tabling the Fiscal Responsibility Act (FRA) in the Parliamentary session this October. The Act, which is formulated to suit the Malaysian context, is expected to improve the country's fiscal legal framework.

FRA contains robust fiscal management principles with an emphasis on governance, accountability, and transparency in managing public finance. It will accentuate the accountability of the Minister of Finance to the Parliament in carrying out his responsibilities to formulate fiscal policy and manage public monies.

The meeting was attended by the Deputy Prime Minister and Minister of Rural and Regional Development, Minister of Economy, Chief Secretary to the Government, Treasury Secretary-General as well as senior officials of Ministry of Finance, Ministry of Economy, and Bank Negara Malaysia. The Committee plays a key role in formulating strategies, providing guidance on improving the management of public finances, and strengthening the Government’s financial position in the medium- and long-term.

Ministry of Finance
Putrajaya
11 September 2023