Kenanga Research anticipates that Budget 2024, scheduled to be presented this Friday (Oct 13), by Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim, will prioritise the revival and acceleration of existing projects over the announcement of new megaprojects.
It said the budget aims to align with the Malaysia MADANI economic framework and expedite the 12th Malaysia Plan (12MP) Mid-Term Review (MTR) for 2021-2025.
One key highlight is the emphasis on improving public transport connections and accessibility, reflecting the government’s commitment to enhancing infrastructure.
In terms of economic targets, the government is expected to set a higher gross domestic product (GDP) growth target for 2024, potentially ranging between 5.0% and 5.5%. This aligns with the growth targets outlined in the 12MP MTR.
The research house said its current base target for GDP growth stands at 4.9%, it is contingent on unforeseen external shocks to the growth outlook.
Budget 2024 may also feature an optimistic fiscal deficit target, possibly around 4.6%, reflecting the government’s fiscal approach outlined in the 12MP MTR and Medium term fiscal framework (MTFF) 2023-2025.
However, its remain conservative, targeting a range between 4.5% and 5.0% due to the challenging global economic environment in 2024.
The budget may introduce new taxes, such as capital gains tax and luxury tax, along with measures to tighten tax loopholes and potentially reintroduce the Goods and Services Tax (GST). These measures are expected to boost revenue in 2024.
Oil-related revenue is predicted to remain stable in 2024, supported by a favourable outlook for Brent crude oil prices, expected to stay above US$80 (RM378.60) per barrel. This is driven by global oil demand, OPEC supply cuts, and geopolitical tensions.
Despite the expectation of lower dividend collection from PETRONAS, the implementation of a multi-tiered levy mechanism for low-skilled foreign labor may offset potential losses in non-tax revenue collection.
Budget 2024 will also introduce the New Central Database Hub (PADU) to eliminate blanket subsidies, particularly for RON95 and diesel, and increase social assistance through the Sumbangan Tunai Rahmah (STR) program.
Additionally, the government may raise wages for public servants and introduce Progressive Wage Modelling (PWM) in the second quarter of 2024 to address the rising cost of living and enhance worker productivity.
Development expenditure is expected to focus on enhancing socioeconomic development to create favourable conditions for economic growth.
Investments in transportation, education, healthcare, and telecommunications infrastructure will be a key focus, aimed at promoting national prosperity.
