JOHOR BARU: The government will continue its efforts to reduce the country's fiscal deficit and ensure its current account surplus is strong, said Minister in the Prime Minister's Department Datuk Seri Abdul Wahid Omar.
These moves, he said would ensure that the country will not experience what is called twin deficit, referring to fiscal deficit and deficit in the current account.
According to him, the country's trade surplus currently is still strong although there was reduction in exports and increase in imports, while the fiscal deficit was projected at four per cent this year and three per cent by 2015.
"With the efforts taken and to be taken by the government, I don't feel we will experience twin deficit (fiscal and current account)," he said to reporters after attending "The Future of Urban Living" conference in Nusajaya today.
The conference was organised by Singapore Eisenhower Fellowship Society and Eisenhower Fellows Association Malaysia.
He said this when commenting on the concern voiced out by international credit rating agency on the twin deficit threat to Malaysia's economy.
According to Abdul Wahid, the rise in the country's imports was due to various factors including imports of lumpy items such as acquisition of new aircraft by Malaysia Airlines (MAS).
However, he said the acquisition of new aircraft by MAS would provide benefits to the airline in the future.
The reduction in the current account surplus was also due to the increase in the intensity of investments by local companies and funds in companies as well as properties overseas, he said.
"But, Insyallah, based on our projection, with the efforts that we are taking, we feel we will be able to maintain the current account surplus in a sustainable way," said Abdul Wahid.
On subsidy rationlisation, he said the government needed to do something to reduce the susidy which amounted to between RM37 billion and RM38 billion of revenue last year.
Fuel subsidies alone, he said cost RM24 billion last year or 12 per cent of the country's overall revenue.
"It is too big an amount, so we must reduce the spending on subsidies," he said, adding the subsidy reduction would be made at an acceptable level.
The government was aware of the impact on the rakyat if the subsidies were reduced, he added.
Abdul Wahid was also asked on the possibility of the government introducing the goods and services tax (GST) during the 2014 Budget presentation next Friday and said the decision was in the hands of Prime Minister Datuk Seri Najib Razak who is also Finance Minister.
However, he said a lot of studies by the government and the private sector including economic analysts showed that GST was the best way to boost the government's revenue.
"Economic experts and and analysts opine that GST is overdue," said Abdul Wahid, adding the government would also ensure that the low-income group will not be badly affected by the introduction of the GST.-- Bernama