2021 operating expenditure revised lower by 7.1% from original budget

2021 operating expenditure revised lower by 7.1% from original budget
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KUALA LUMPUR (Oct 29): The operating expenditure (OE) for 2021 was revised lower by 7.1% to RM219.6 billion from the budget allocation of RM236.5 billion. This came as estimated revenue was projected to be lower than estimated, on account of the additional stimulus doled out to ease the pandemic pains as well as the containment measures that exerted pressure on revenue.

In the 2021/22 Economic Report, the Ministry of Finance (MoF) said the downward revision in OE stemmed from the savings in grants and transfers as well as supplies and services. This was due to the budget cuts in grants to statutory bodies with high reserves.

Supplies and services were also revised lower as some items related to development were reclassified to development expenditure as well as savings derived from the suspension of allocation for non-critical items.

When compared to 2020, the revised OE is 2.2% lower than 2020’s RM224.6 billion. The lower allocation is largely due to the reduction in supplies and services at RM23.3 billion in 2021 compared to RM29.3 billion in 2020.

The OE in 2021 also saw the outlays of subsidies and social assistance declining to RM16.7 billion from RM19.8 billion in 2020 as the financing of the cash assistance programme was done through the Covid-19 fund. Nevertheless, the savings are expected to be offset by the higher outlays for fuel subsidy, said the MoF.

Meanwhile, emoluments and retirement charges, the largest component of the OE, are estimated to increase to RM84.5 billion and RM27.6 billion respectively from the annual salary and pension increment.

Emoluments and retirement charges are estimated to make up 51.1% of total OE in 2021.

In 2020, emolument amounted to RM83 billion while retirement charges stood at RM27.5 billion.

Debt services charges are also estimated to increase by 13.1% to RM39 billion from RM34.5 billion in 2020 following higher financing needs for development expenditure and Covid-19 related expenses.

At the same time, grants and transfers to states and statutory bodies are also estimated to increase by 16.6% to RM20.9 billion from RM18 billion in 2020.

For more stories on the Economic Report 2021/2022, click here.

S Kanagaraju