This article first appeared in The Edge Malaysia Weekly on October 21, 2024 - October 27, 2024

The federal government is budgeting to spend RM421 billion in 2025, more than the RM339.71 billion revenue it expects to earn. While it is still running a deficit budget, the gap is narrower at RM79.97 billion or 3.8% of gross domestic product — versus RM84.29 billion in 2023 and RM91.39 billion in 2022 — thanks to improved tax revenue. And it is on track to achieving a fiscal deficit of 3.5%.

Still, operating expenditure, which takes up 98.6% of revenue, remains a cause for concern. The fast-growing emoluments (RM105.9 billion), retirement charges (RM40.56 billion) and debt service charges (RM54.7 billion) will eat up nearly 60% of what it earns. 

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