-  In 2013, Petronas posted a net profit growth of 8.4% to RM54.11bil owing to the improvement in oil and gas production in South Sudan, Iraq, Malaysia and Canada (2012: RM49.92bil).

-  Nonetheless, Petronas’ dividends to the government were lower than expected.

-  Petro-dollar revenue is RM27.0bil for 2014, which is RM1.28bil short of the earlier expectations in the budget announcement.

-  This is in tandem with Petronas’ commitment to pay out 30% of its income as dividends to the Federal government.

-  During the Budget 2014 announcement, the government had projected petroleum tax revenue of RM28.28bil in 2014.

-  As such, ceteris paribus, overall government revenue will fall slightly short of its budgeted amount of RM224.09bil in 2014.

-  Unless the government manages its expenditure and enhances revenue, or GDP advances stronger than expected, full-year deficit for 2014 will be wider than the government’s target.

-  Assuming that the overall revenue is down by RM1.28bil and GDP continues to grow by 5.0%-5.5% in 2014, budget deficit will likely come in at 3.6% of GDP (instead of the government’s targeted shortfall of 3.5%).

-  Malaysia trimmed its fiscal deficit to 3.9% of GDP in 2013 after reducing public spending and cutting subsidies.

-  The government had initially projected a budget shortfall of 4.0% of GDP in 2013 (2012: 4.5% of GDP).

-  Revenue advanced by 2.6% YoY to RM213.4bil in 2013, driven by strong growth in revenue during 4Q13.

-  Note that revenue grew by 6.8% to RM61.1bil in 4Q13, which accounted for 28.6% of full-year revenue in 2013.

-  Total outstanding debt of the Federal government stood at RM539.9bil or 54.8% of GDP as at end-December 2013. 

Source: AmeSecurities