Kuala Lumpur, 01 September 2021 – The Institute for Democracy and Economic Affairs (IDEAS) Malaysia congratulated and welcomed Malaysia’s first ever Pre-Budget Statement (PBS) released by the Ministry of Finance on 31st August 2021. The statement provides an update on the progress of the 2021 budget implementation  including  the implementation of stimulus packages, progress of  revenue collection and expenditure, and revised growth rate. But most importantly , the statement provides the   growth forecast and priorities for the 2022 budget.   

As stated by IDEAS, a pre-budget statement (PBS) is one of the eight key budget-related documents normally recommended by established international organisations such as the International Budget Partnership (IBP), to be made available to the public for transparency purposes. This type of document normally sets out the government’s budget strategies for one or two budget years and encourages meaningful discussion between ministries and stakeholders. The PBS can also help set appropriate public expectations of the budget. 

IDEAS CEO, Tricia Yeoh, commented, “IDEAS has long called for ways in which the Ministry of Finance can improve its position in the international Open Budget Survey, which measures the budget transparency of each country. As pointed out in the Pre-Budget Statement, Malaysia scores relatively low at 47 compared to regional neighbours Philippines (76), Indonesia (70) and Thailand (61). Making Pre-Budget Statement publicly available onwards will certainly improve our scores. We  have encouraged the government to take this up for many years, and we are therefore pleased to see this unprecedented step being finally implemented. We thank the Minister of Finance, and the National Budget Office in particular, for their responsiveness to our call.”

“The PBS provides a new milestone in Malaysia’s ongoing efforts in improving its budget transparency and accountability. IDEAS also welcomes the plan to release a consultation paper on the Fiscal Responsibility Act (FRA), which will provide a clear strategic direction of Malaysia’s fiscal plans in the future.” 

The statement has many elements of a Mid-Year Review (MYR) document, including updates on the ongoing budget implementation. This is a good move. It should be noted that other countries such as South Africa normally combine their pre-budget statement and mid-term review into one singular document. IDEAS believed that should this be the direction Malaysia wishes to take, then it would be prudent to include this in the future FRA.

As stated by IDEAS’ Senior Research Manager in Public Finance, Sri Murniati Yusuf, “While the pre-budget statement is certainly a welcome development, we believe that it can still be improved upon by providing more information on the 2022 Budget as well as projections of revenue, expenditure and debt levels for the next two to three years. Including this information would bring us up to the international standard of budget transparency. This will also show whether the government has a clear plan on fiscal consolidation.” 

“We also welcome the plan to review public spending. It should be noted that most developed economies already have this mechanism in place and this will be an important tool in government’ future efforts to expand its fiscal space.”

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For enquiries, please contact:
Zokhri Idris, Ph.D, Director, External Relations
T: +603 2070 8881/8882 | E: zokhri@ideas.org.my