Siena:The government has outlined plans to gradually reduce the fiscal deficit to three percent by 2028 to maintain a sustainable financial position. This initiative involves decreasing the deficit to 3.3 percent of GDP by 2027.

According to BERNAMA News Agency, Treasury secretary-general Tan Sri Johan Mahmood Merican noted that the target was established in anticipation of a slight moderation in economic growth next year, influenced by global economic uncertainties. He made these remarks during a briefing on Budget 2027.

Johan explained that while GDP growth may moderate, unemployment is expected to remain low, although there might be a slight rise in inflation. The government's fiscal policy aims to achieve a deficit of 3.6 percent this year, reducing to 3.3 percent in 2027, and further to three percent in 2028. Additionally, the Federal Government's debt-to-GDP ratio is projected to decrease from 65.2 percent in 2025 to 63.7 percent in 2027.

Budget 2027 allocates RM459.8 billion for federal expenditure, an increase from the RM419.2 billion estimated for Budget 2026. When considering investments from various entities, the total expenditure under Budget 2027 amounts to RM510 billion, up from RM470 billion in 2026.

Johan emphasized the importance of managing government spending prudently, particularly due to high national fuel subsidies projected at RM40 billion next year. He also addressed the potential impact of the strengthening ringgit on import prices, stressing that it does not automatically translate to lower prices due to other influencing factors like market structure and competition.

Efforts to simplify import processes and increase market competition are underway to ensure consumers benefit from the ringgit's appreciation. These measures are part of the government's broader strategy to control the deficit and manage expenditures responsibly.