Mildly Expansionary – As expected, the re-tabling of the Budget did not experience a significant change relative to the previous Budget 1.0 that was tabled on 8th October 2023. Below are the key highlights on the finance:

• A total budget of RM386 billion was allocated for overall spending, which is 5.1% higher than the initial allocation announced earlier of RM367 billion. RM97 billion is allocated for the development expenditure, which is 2.1% higher than the previous budget, and the other RM289 is allocated for operation expenditure, which is 6.2% higher than the previous budget announcement.

• On the revenue side, around RM292 billion is expected. This amount is 6.9% higher than the initial budget, but 1.0% lower than the 2022 estimated collection of RM294 billion.

• The fiscal deficit ratio is expected narrow to 5.0% of GDP, which is smaller relative to initial budget of 5.5% of GDP. The current fiscal deficit ratio is 5.6% of GDP.

• The narrower fiscal deficit is in line with the long- and medium-term commitment in practicing fiscal discipline. The Medium-Term Fiscal Framework (MTFF) is maintained, where the fiscal deficit per GDP is projected to average at 4.1% between 2023 – 2025.

Major Beneficiaries

• The B40 and M40 are the winner given the cash handout worth RM8 billion and the tax cut for middle-income is also expected to benefit private consumption.

• Micro-Small and Medium Enterprises (MSMEs) will also gain front the loan grants and tax cut.

Source: AmInvest Research - 27 Feb 2023