“Surplus”?

There’s a language to economics and government finance, just like in any other field. It’s one thing for an outsider to make a mistake in terminology, but it’s quite another when government ministers (or the journalists covering them), make the same mistakes.

In Bernama today:

Government Has RM10 Billion In Surplus Even Without Adjusting Subsidy - Husni

IPOH, July 18 (Bernama) -- The government will still have a surplus of RM10 billion even without implementing the subsidy adjustment, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said.

He said the subsidy rationalisation programme announced this week was to make the country's economy more efficient.

"Taxes collected by the Customs Department and the Inland Revenue Board will be RM158 billion this year compared to RM148 billion projected when the 2010 Budget was tabled last year," he told reporters after handing over RM450,000 for the construction of the Taman Chepor Damai surau here.

He was responding to claims by the opposition that the government had to reduce subsidy because the government's income was diminishing due to wastage.

There is an enormous difference between RM10 billion in increased revenue, and RM10 billion in surplus – which implies revenue in excess of expenditure (and thus obviously not true). I suspect that this really a translation problem – I hope.

In any case I’m happy to see that revenue is higher than projected (though this has often been the case – see this post). On the other hand, this will have no impact on the deficit for this year, in light of the RM12 billion in off-budget expenditure that the government has earlier alluded to (ibid). Add in the savings from this first round of subsidy rationalisation (RM750 million), and we’re pretty much square compared to last year’s budget projection of the deficit in Ringgit terms.