Spending beyond its budget

Overspending the supply budget has been a trend in Malaysia. Since 1968, the government has gone to Parliament at least twice a year to ask for additional funds. Supply expenditure, along with charged expenditure, makes up the government’s operating budget. 

This year, the Ministry of Finance (MoF) tabled a bill on March 24 seeking an additional allocation of RM 2.4 billion to cover overspending in the 2013 supply budget. As a result, supply expenditure for 2013 has risen by RM 16.5 billion or 10.2% to RM 179.1 billion. Therefore, to spend within its 2014 supply budget of RM174.8 billion, the government will have to cut expenditure by 2.4% or RM4.3 billion.

However, there is urgency to cut spending this year, especially since international rating agencies have been calling for Malaysia to reduce its expenditure to avert a credit-rating downgrade. 

Will this spur the government to spend within its 2014 budget or should we expect another supplementary budget again?

Will there be sufficient cost savings from the subsidy rationalisation measures to buffer the impact of the overspending in supply budget?

Will the rising inflation cap the government’s ability to implement further subsidy cut in 2014?

Read the full article in The Edge this week.