KUALA LUMPUR (May 21): Malaysia is unlikely to realise its initial target for a balanced budget by 2020 considering the current economic climate and challenges at hand, accodring to AmResearch.

In an economic report in conjunction with the tabling of the Eleventh Malaysia Plan (11MP), the research house said the 11MP will be the final five-year development plan as the nation leaps towards a profound transformation approaching Vision 2020.

It said the development expenditure for the upcoming five years was likely to remain at RM230 billion as the government aims to achieve fiscal prudence.

AmResearch said the development plans under 11MP will likely stress on the following: (i) expenditure to be centred on the 12 NKEAs; (ii) continuously reduce budget shortfall; (iii) attain sustainable growth momentum; and (iv) achieve gross national income per capita of USD15,000 by 2020.

AmResearch said that during most part of the 10MP period, growth was supported by the private sector.

It said in the demand sub-segment of GDP, the component of private sector expenditure had contributed substantially to growth.

The research house said investments had exceeded the average annual target of RM148 billion set under the 10MP for the fourth consecutive year in 2014.

AmResearch said total approved investment had advanced to RM235.9 billion in 2014, driven by both domestic (+7.1%) and foreign investments (+8.6%).

Nonetheless, it said the government was unable to attain certain targets under the 10MP period, which included ratios for debt-to-GDP and fiscal balance.

“The government had previously envisaged a budget shortfall of 2.8% for 2015, compared to the current estimate for a shortfall of 3.2% in 2015.

“Meanwhile, debt level stood at 54.5% of GDP in 2014 (versus the target of 49.9% for 2015),” it said.