Budget 2023 will foster growth for continued recovery

Published on 07 Oct 2022.

Share Tweet Email

Given the various support measures incorporated, Budget 2023 is viewed as appropriate to support the economy. With a notable allocation of RM372.3 bil, the Budget includes measures such as income tax cuts and cash handouts which will help buoy demand next year. The Government’s growth target of 4.0%-5.0% is seen as realistic and will be mainly supported by domestic demand amid softer global activity.

The Government expects to collect a reduced amount of fiscal revenues next year at RM272.6 bil (2022e: RM285.2 bil) as the smaller PETRONAS dividend more than offset increases in tax revenue. Operating expenditure will fall to RM272.3 bil (2022e: RM284.7 bil) on account of a smaller allocation for subsidies and social assistance amid expectations of lower commodity prices and the rollout of targeted subsidies. Meanwhile, development expenditure will rise to RM94.3 bil (2022e: RM71.2 bil) amid higher spending on the economics sector partially due to the commencement of new infrastructure projects. 

Malaysia continues to undertake a gradual fiscal consolidation path with the fiscal deficit projected to narrow to 5.5% by end-2023 (2022e: 5.8%) in line with reaching the targeted 3.5% by 2025 set under the 12th Malaysia Plan. Government debt is estimated to remain hefty at RM1.14 tril (63.0% of GDP). This raises some concern as fiscal space is constrained, with debt-servicing costs remaining significant at 16.9% of revenue in 2023.

Analytical contact
Nur Nadia Mazlan
(603) 3385 2513

Media contact
Tho Li Ming
(603) 3385 2511


About RAM Rating Services Berhad (RAM Ratings)
Established in 1990, RAM Ratings is a leading credit rating agency registered under the Securities Commission’s Guidelines on Registration of Credit Rating Agencies, 2011. In addition to the provision of credit ratings for corporate bonds and sukuk and their issuers, RAM Ratings also provides research and publications on Islamic finance, fixed income and macro-economic and industry analysis as well as data analytics relating to credit risk, counterparty assessments and other related domains. 

Although every reasonable care has been taken to ensure the accuracy, completeness and objectivity of the information contained in this Media Release, RAM Ratings makes no representation or warranty, whether express or implied, as to its accuracy, completeness and objectivity and accepts no responsibility or liability relating to any losses or damages howsoever suffered by any person arising from any reliance on the views expressed or information in this Media Release. RAM Ratings assumes no obligation to update any information or statement contained herein, save for any information required to be disclosed by law.

Published by RAM Rating Services Berhad
© Copyright 2022 by RAM Rating Services Berhad
All rights reserved. This material may not be published, reproduced, broadcast, rewritten or redistributed without prior permission.