THE World Bank has expressed concern over Malaysia’s steep decline in tax revenues as a percentage of gross domestic product (GDP), reports The Edge.

In Budget 2019, Malaysia is projected to record the lowest level of fiscal revenue to GDP, said World Bank country economist Shakira Teh Sharifuddin.

The figure also includes an RM30 billion one-off dividend from Petronas.

The bank released its biannual Malaysian Economic Monitor yesterday and revised its projection of Malaysia’s GDP downwards by 0.2% to 4.7% this year, reports Bernama.

In October, the bank revised economic growth to 4.9% from 5.4% projected earlier.

Shakira said government spending and investment under Budget 2019 were lower because of rigorous rationalisation plan as well as overall investment activities, which picked up post-14th general election.

“These two major developments were taken into account in the country’s economic growth projection,” she said, adding that the country’s investment had slowed down in the first half of 2018 prior to GE14 on May 9.

On the declining government revenues, she was quoted as saying: “Moreover, when we look across other countries, not only is Malaysia slated to record the lowest level of fiscal revenue to GDP, but the magnitude of decline over the years between 2012 and 2019 has also been one of the steepest.”  

It declined from 21.4% to 16.2% last year, data shows.

The government’s high level of public debt is also a concern, said Mara Warwick, World Bank’s country director for Brunei, Malaysia, the Philippines and Thailand.

“It is important that efforts to sustain growth in the near term are carefully balanced with the need to restore fiscal buffers,” she was quoted as saying. – December 19, 2018.