Malaysia’s 2016 Budget: Pursuing Fiscal Consolidation while Skirting Critical Growth Concerns

Abstract

The 2016 Budget for Malaysia was tabled on 23 October, 2015. It has drawn much interest as it is the first budget under the 11th Malaysia Plan (2016-2020), which is the last medium-term plan in the nation’s journey to ‘high income’ status as laid out in its Vision 2020. Themed ‘Prospering the Rakyat’, the 2016 Budget continues to be guided by the ‘people economy’, a concept coined in the previous budget. This budget’s allocation for 2016 amounts to RM 265 billion, with 81 per cent for operating expenditure and 19 per cent for development expenditure. The Budget has five priorities, the first three of which are economic – strengthening economic resilience, enhancing productivity, and empowering human capital. The fourth and fifth are more social, and are for advancing the bumiputera agenda and easing the cost of living for the Rakyat. The priorities, their proportion of the total budget allocation, and key strategic initiatives are set out in Table 1.