Friday, December 6, 2013

3Q2013 Government Finance

The latest data on government finance is now available (RM millions):


As you can see, both revenue and expenditure have taken a hit this year – while growth numbers have been mostly positive, the increases have been relatively modest (log annual changes):


That’s a reflection of slower nominal income growth over 2013, as well as fiscal consolidation. Revenue growth for the first three quarters of the year is running at just 1.0%, compared to 9.4% at the same time last year. The slowdown in opex is not quite so sharp, clocking in at 6.0% compared to 12.4% in the first three quarters of 2012. The overall operating budget is showing a minor deficit of about RM160 million, a primary deficit of about RM9.0 billion, and an overall deficit of RM24.8 billion.

Does that mean the government might miss its deficit target of 4.5% this year? Not really, because development expenditure has contracted, which incidentally means government debt growth is slower this year as well (I’ll cover that in the next post).

Nominal GDP growth has also recovered from the sharp dip in 1Q2013, so I think it’s safe to say the fiscal deficit target is still credible, but at the cost of much lower expenditure and investment than initially planned for.

The 4Q2013 government numbers will be interesting to see – unfortunately, we’re not going to see them until the end of February 2014.

Technical Notes:

Data on government finance from the October 2013 Monthly Statistical Bulletin from Bank Negara Malaysia


  1. Hi Hisham, how do you calculate the operating budget, primary deficit and overall deficit?

    1. amir,

      Operating budget = revenue - operating expenditure

      Primary deficit = revenue - (total expenditure - debt service)

      Overall deficit = revenue - total expenditure