Surprise ... Surprise!

This article first appeared in The Edge Financial Daily, on March 20, 2018.
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KUALA LUMPUR: Just when economists are convinced that the federal government is getting prudent with spending, Putrajaya is now seeking Parliament’s approval for RM8.83 billion more to spend, of which the bulk of it is meant for operating expenditure.

The extra sum is on top of the RM260 billion Budget 2017 presented by Prime Minister Datuk Seri Najib Razak, who is also the finance minister, in October 2016.

The additional sum is the highest since 2013. This begs the question of whether the finance ministry (MoF) has underestimated the expenditure or that the federal government has spent more than it earned, although the inland revenue board’s direct tax collection has grown 8.15% and Petroliam Nasional Bhd raised its dividend to RM19 billion in 2017 versus RM16 billion in 2016.

In a supplementary supply (2017) bill 2018 yesterday, the MoF said the additional spending is meant for expenditure on the services and purposes already specified in Budget 2017, but not fully provided for at that point of time.

Out of the total sum of RM8.83 billion, some RM7.79 billion is allocated for operating expenditure and only RM1.05 billion is for development expenditure.

The total operating expenditure comprises RM7.12 billion for supply expenses, such as ministry activities, and RM663.5 million for other expenses including pensions, retirement allowances and rewards.

The biggest item under supply expenses is RM2.71 billion contribution to statutory funds, which the MoF said it is surplus from consolidated revenue account being transferred to development fund.

The other bigger expenditure include RM891.1 million for the education ministry, RM804.27 million for the home ministry, RM685.49 million for the agriculture ministry and agro-based industry, RM479.07 million for the health ministry, RM425.41 million for the higher education ministry and RM395.74 million for the public service department.

The MoF also said RM1.25 billion of this additional operating expenditure has been advanced from the approved allocation of RM1.5 billion contingency spending.

The main items under contingency spending are RM316 million of supplies and services for the education ministry, RM150 million each for fixed payments and charges to the higher education ministry’s headquarters and cooking oil price stabilisation scheme under the ministry of domestic trade, co-operatives and consumerism.

Last year, while justifying the government’s supplementary budget for 2016, Second Finance Minister Datuk Seri Johari Abdul Ghani said contingency spending was meant to facilitate government’s spending for unforeseen events.

In terms of development expenditure under the supplementary budget yesterday, the works ministry spent an addition of RM600 million, the most among the ministries, mainly for building new roads and road upgrades.

The bill was tabled for first reading in the Dewan Rakyat yesterday, followed by continuation of debate on royal address by the King.