Having said that, there were still plenty of giveaways in this revised Budget 2023. For example, there was a notable 40% increase in allocation for subsidies compared with the old budget tabled in October 2022 (just prior to the 15th general election). As we have explained before, democratically elected governments cannot afford to inflict pain on voters and expect to stay in power. Most are naturally biased against policies that will be unpopular with the masses.
Malaysia’s long-awaited Budget 2023 was finally re-tabled by Prime Minister Datuk Seri Anwar Ibrahim on Feb 24. On balance, the budget was better than we had expected — it was expansionary but not overly populist.
For instance, civil servants were not given a pay rise, as has been the case with previous administrations (although there were some one-off allowances for those in lower grades and government retirees). The omission underscores the overall tone of this budget — necessarily fiscally prudent, given the country’s already-high debt burden. The government’s debt and liabilities totalled RM1.5 trillion (S$450 billion), or 81% of GDP, accumulated over decades of widening public deficits. The last time Malaysia ran a budget surplus was in 1997. Persistent deficits and rising debt have consequences, including, we believe, the secular depreciation of the ringgit.
