KUALA LUMPUR, Oct 13 — A sum of RM393.8 billion or 19.9 per cent of gross domestic product (GDP) is allocated for Budget 2024, with a large chunk of the amount going to three ministries, Finance, Education and Health, collectively accounting for 42.3 per cent of the total.
Out of the amount, RM303.8 billion or 77.1 per cent is channelled to operating expenditure (OE), while the remaining RM90 billion is allocated for development expenditure (DE), the Ministry of Finance (MoF) said in its 2024 Fiscal Outlook and Federal Government Revenue Estimates report released today.
For 2023, the Federal Government’s total expenditure has been revised upwards to RM397.1 billion, equivalent to 21.5 per cent of GDP, from the budget allocation of RM386.1 billion or 20.4 per cent of GDP.
“For 2023, the revised OE is anticipated to increase by 2.5 per cent to RM300.1 billion or 16.2 per cent of GDP, predominantly due to higher subsidy outlays for electricity and cooking oil, cleaning and security services for schools as well as initiatives under the Ekonomi Madaniframework,” it said.
While acknowledging that meeting expenditure needs is going to be challenging due to the external headwinds, the government remains committed to striking a balance between providing fiscal support to effect long-term structural changes and ensuring prudent public spending.
Dissecting the numbers, in terms of sectoral allocation for Budget 2024, the ministry said the social sector is allocated RM149.7 billion or 7.6 per cent of GDP, followed by the economy (RM66.7 billion; 3.4 per cent), security (RM40.1 billion; two per cent) and general administration (RM16.9 billion; 0.9 per cent) sectors.
The remaining balance of RM120.4 billion is budgeted for charged expenditures and transfer payments.
To continue supporting public sector consumption, the allocation for OE is budgeted at RM303.8 billion or 15.4 per cent of GDP, according to the MoF.
“While there is a higher allocation for emoluments, debt service charges (DSC), retirement charges as well as supplies and services, the increases are offset by a lower subsidy allocation, causing only a slight increase in OE by 1.2 per cent as compared to 2023,” the ministry shared.
Emoluments for civil servants remain the largest component, comprising 31.5 per cent of OE, and are projected to expand by 4.8 per cent to RM95.6 billion.
The growth is predominantly attributed to annual salary increments and new hires to fill critical positions, particularly in health and education services.
Additionally, the allocation for subsidies and social assistance, accounting for 17.4 per cent of OE, is projected to decrease by 17.9 per cent to RM52.8 billion, primarily due to the gradual implementation of subsidy rationalisation programmes mainly on fuel and electricity.
Of the total, about 60 per cent is allocated for subsidies, while the remaining is for social assistance and incentives.
In addition, the social assistance programmes will be further strengthened via the establishment of a new centralised database to address both inclusion and exclusion errors.
Meanwhile, a sum of RM49.8 billion is allocated for DSC, which constitutes 16.4 per cent of OE, primarily driven by the increase in the Federal Government debt.
“In tandem with the Ekonomi Madani framework, the fiscal stance will continue to emphasise public expenditure efficiency and effectiveness as well as generating higher value for money while minimising leakages and wastages,” the MoF said, adding that this endeavour would be undertaken through fostering good governance and accountability on public finance.
