General picture of public transportation in Kuala Lumpur, October 29,2021. — Picture by Ahmad Zamzahuri
KUALA LUMPUR, Oct 29 — Budget 2022, as announced by the Ministry of Finance (MoF) today, is worth RM332.1 billion in estimated spending, with RM233.5 billion or 70 per cent of which has been designated for operating expenditure (OE).
The MoF’s Fiscal Outlook and Federal Government Revenue Estimates 2022 report detailed that RM75.6 billion or 22.8 per cent of the total expenditure will be set aside for development expenditure (DE), and the remaining RM23 billion for the Covid-19 fund.
“In terms of sectoral allocation, RM133.2 billion or 40.1 per cent of the total Budget 2022 will be allocated for programmes and projects under the social sector, followed by economic (20.3 per cent), security (10.3 per cent) and general administration (4.8 per cent) sectors,” read MoF’s report.
Operating expenditure
The bulk of Budget 2022’s OE total is estimated to go towards emoluments for the civil service amounting to RM86.5 billion or 37 per cent of the entire OE allocation.
Retirement charges are estimated to cost RM28 billion, while RM43.1 billion will go towards debt service charges for both local and external borrowings.
Grants and transfers to state governments are expected to cost RM7.9 billion, while grants to statutory bodies are estimated to amount to RM14 billion.
Some RM30.3 billion is expected to go towards supplies and services acquired by the government, an increase of 30.5 per cent from last year’s allocation.
“The increase is attributed to higher outlays for medical supplies as well as an allocation for professional services.
“Ministries that will be receiving the highest allocation among others are the Ministry of Health (33.1 per cent), the Ministry of Home Affairs (12.5 per cent), and the Ministry of Education (11.2 per cent),” read the report.
Another RM17.3 billion has been allocated for subsidies and social assistance, RM533 million for government asset acquisitions, RM375 million allocated for refunds and write-offs, and RM5.2 billion listed as “others”.
MoF’s report also broke down the OEs by industry, where RM18.7 billion is estimated to be set aside for economic purposes.
These include RM6.5 billion for the transport sector, RM3.9 billion for trade and industry, RM3.1 billion for the agricultural sector, RM440 million for energy and public utilities, RM125 million for the environmental sector, RM88 million for the communications sector, and RM4.5 billion listed as “other” expenses.
As for the social sector, RM95.9 billion has been allocated; RM59.3 billion to education and training purposes, RM28.3 billion to health-related initiatives, RM400,000 for housing, and RM8.2 billion for “other” purposes.
From the RM25.1 billion allocated for the security sector, RM11 billion is estimated to be set aside for defence purposes, and RM14 billion for internal security.
General administration is set to cost an estimated RM12.3 billion next year, with RM81.2 billion allocated for “other” purposes.
Development expenditure (DE)
Out of the RM75.6 billion allocated for 2022’s DE, 53.3 per cent or RM40.2 billion is expected to go towards the economic sectors, RM22.68 or 30 per cent going towards the social sector, RM8.9 billion towards the security sector, and RM3.7 billion for general administration.
“Of the total, RM66.9 billion is allocated for 5,575 ongoing projects, while RM8.7 billion is for 1,180 new projects,” read the report.
The transport sector is set to be the largest recipient under the economic DE, with RM15.5 billion allocated to construct, refurbish, and maintain key infrastructures such as highways, roads, railways, bridges, ports, and airports.
Other economic DE allocations include RM3.2 billion for the energy and public utilities sector which MoF says is directed towards providing the rakyat with better access to electricity and water, telecommunications, and sewerage services.
The agriculture sector will receive RM2.9 billion which is mainly meant for settlers and smallholders’ development programmes, oil palm and rubber replanting, paddy irrigation systems, and the breeding of poultry and cattle.
Meanwhile, RM2 billion has been allocated for the trade and industry sub-sector, RM2.1 billion for the environmental sector primarily meant for river restoration, flood mitigation and upkeep of other water management assets, with RM975 million for the communications sub-sector.
The social sector and related sub-sectors are set to receive RM22.7 billion in 2022, up from the RM17.3 billion in 2021.
A bulk, or RM12 billion, is estimated to be spent on education and training initiatives, including those for Technical and Vocational Education and Training (TVET) programmes, research grants, and the construction and expansion of educational institutions.
“The health sub-sector will be allocated RM4.5 billion to ensure the availability and accessibility of a comprehensive healthcare system. In addition, the provision will also be utilised to procure medical service vehicles and equipment,” said the report.
Among the health projects mentioned include the construction of Kapar Hospital in Selangor, as well as upgrading of government hemodialysis facilities at public hospitals in Kedah, Penang, and Perak, and the autopsy room of the Sultan Ismail Hospital Forensic Department in Johor.
A sum of RM1.8 billion has been allocated for the housing industry, particularly for the construction and upgrading of public housing units (PPR) and civil service quarters.
As for DE in the security sector, RM9 billion is set to be allocated for enhancements to existing network systems, the upgrading of military assets and security equipment, upkeep of other infrastructure projects, and upgrades to prisons.
Development expenditure for the government’s general administrations has been estimated to cost RM3.8 billion, mostly aimed at strengthening the public sector through digitalisation and expansion of data centres, while also going towards maintenance of government buildings and assets.
Federal government debt
The report indicates that the government projects overall debt levels to reach 66 per cent of the gross domestic product (GDP), and statutory debt levels to reach 63.4 per cent of the GDP by the end of 2022, which would be lower than the recently approved 65 per cent to GDP debt threshold.
As of the end of June 2021, MoF said Malaysia’s total debt and liabilities exposure stood at RM1.333 trillion.
This comprises RM958.4 billion in federal government debt, RM190 billion from committed government guarantees, and RM152.9 billion from public-private partnerships, private finance initiatives, and infrastructure incorporated company PBLT Sdn Bhd.
At the end of 2020, MoF states that the total debt and liabilities exposure stood at RM1.268 trillion.
External debt, as of the end of June 2021, stood at RM 1.020 trillion, which includes short-, medium- and long-term off-shore borrowings, amounting to RM589.4 billion, and non-ringgit denominated loans worth RM206.8 billion.
Meanwhile, total outstanding obligations for 1Malaysia Development Berhad (1MDB) stand at RM39.3 billion; RM32.2 billion in principal payments owed, and RM7.1 billion in interest on the debt.
“As of September 2021, the government has paid up to RM12.8 billion for 1MDB’s financial commitments and debt servicing via loans and advances from the government or MOF Incorporated amounting to almost RM10 billion as well as utilisation of the (Assets Recovery) Trust Account,” said MoF.
Additionally, to date, MoF said a total of RM18.2 billion worth of assets linked to 1MDB has been seized or recovered and placed in the Assets Recovery Trust Account under the custody of the Accountant General’s Department.