Malaysia’s 2018 Budget: Balancing Short Term Needs and Long Term Imperatives

Abstract

The 2018 Budget for Malaysia was unveiled by the Prime Minister of Malaysia, Dato’ Sri Mohd Najib bin Tun Abdul Razak, in Parliament on 27 October 2017. The budget was crafted with a clear sight on a general election that must be called by August 2018. Not surprisingly therefore the budget contains well-spread sweeteners for key constituencies, but not overly generous as to derail the medium term goal of achieving a balanced or near-balanced budget by 2020 through a gradual pace of fiscal consolidation. While a more favourable external economic environment has provided the government with some respite from a tightening fiscal space, the government and the private sector should not be lulled into complacency in pursuing the necessary strategic reforms that are needed to tackle the country’s socio-economic development challenges which the annual budget attempts to address with tax reliefs and stop-gap measures. The reform imperatives to strengthen the country’s resilience take on a more urgent note given that the longer term threats may crystallised sooner rather than later amid lingering uncertainties and increased frequency of crises afflicting the global economy.