Finance Minister Lim Guan Eng today said it is possible for Malaysia to achieve a 5% growth in the gross domestic product (GDP) this year. The government is also embarking on fiscal consolidation by gradually cutting the fiscal deficit from 3.7% of GDP in 2018 to 3.4% this year and 3.0% in 2020, he added.

“By 2021, we should be able to cut it to below 3.0%. The consolidation is necessary to preserve our high credit ratings of A3/A-."

“Nevertheless, Malaysia places a premium on economic growth and the consolidation will proceed without sacrificing the well-being of the people,” he said at the 2020 Budget Consultation Meeting at the Finance Ministry.

Budget 2020 will be tabled in Parliament on Oct 11. The theme will be “Shared Prosperity: Engendering High-Quality Inclusive Growth Towards a High-Income Economy”.

The meeting was attended by representatives from 304 government agencies, government-linked companies, ministries, private organisations and international bodies.

Lim also said the government would convert to accrual-based accounting from cash-based by 2021 in order to ensure more transparent disclosure of debt and liabilities as well as the value of assets.

He said the government had been making good progress in managing the debts, and that the level of debts and liabilities had decreased from 79.3% of GDP in 2017 to 75.4% in 2018.

He said the government would like to spend more but was constrained by issues such as 1MDB.

“No country can lose RM150 billion without being hurt by it,” he said. “We have not reached that horizon yet."

“But despite these huge debts, we have not gone bankrupt and we can still pay our civil servants.”

He also spoke of other reform initiatives such as the introduction of the Fiscal Responsibility Act and the Government Procurement Act which he said would further enhance the credibility and accountability of public finances.

He said the government had also established the Debt Management Office to manage the overall government debt and liabilities and undertake comprehensive assessments and reporting of financial risk exposure.

On the cost of living, he said the government is designing a Cost of Living Index to complement the existing Consumer Price Index (CPI).

“Unlike the CPI, which tracks general changes in consumer prices, the new index will determine the minimum living cost required for a person to live comfortably,” he said.

“It will help the government address living costs faced by Malaysians in more precise policies, and curb monopolistic behaviour.”