KUALA LUMPUR (Thomson Financial) - Malaysia's budget deficit will narrow to 3.2 percent of gross domestic product this year from 3.3 percent in 2006, Second Finance Minister Nor Mohamed Yakcop said Monday.
The deficit is expected to fall even though the government has stepped up development spending before the next general election, which is widely expected to be held early next year.
The government has pledged to spend up to 200 billion ringgit under the Ninth Malaysia Plan, its five-year development blueprint which runs through 2010.
Nor Mohamed said the budget deficit will narrow further to 3.1 percent of GDP in 2008.
"We have given a commitment to reduce the budget deficit since the deficit hit a high of 5.5 percent in 2000 due to the extra spending following the Asian financial crisis," Nor Mohamed said.
The economy is expected to remain resilient despite volatile external conditions such as high oil prices because the domestic economy has diversified, the minister said.
"Even in terms of exports, we have diversified away from reliance on one or two countries by increasing our exports to other countries," Nor Mohamed said.
"We are quite resilient in meeting the challenges of the international economy."
The US is Malaysia's largest trading partner.
On the inflation outlook, Nor Mohamed said government will continue to contain inflation and ensure that the inflation rate remains benign.
The inflation rate will stay between 2.0 percent and 2.5 percent next year, the minister said recently.
(1 US dollar = 3.32 ringgit)
The deficit is expected to fall even though the government has stepped up development spending before the next general election, which is widely expected to be held early next year.
The government has pledged to spend up to 200 billion ringgit under the Ninth Malaysia Plan, its five-year development blueprint which runs through 2010.
Nor Mohamed said the budget deficit will narrow further to 3.1 percent of GDP in 2008.
"We have given a commitment to reduce the budget deficit since the deficit hit a high of 5.5 percent in 2000 due to the extra spending following the Asian financial crisis," Nor Mohamed said.
The economy is expected to remain resilient despite volatile external conditions such as high oil prices because the domestic economy has diversified, the minister said.
"Even in terms of exports, we have diversified away from reliance on one or two countries by increasing our exports to other countries," Nor Mohamed said.
"We are quite resilient in meeting the challenges of the international economy."
The US is Malaysia's largest trading partner.
On the inflation outlook, Nor Mohamed said government will continue to contain inflation and ensure that the inflation rate remains benign.
The inflation rate will stay between 2.0 percent and 2.5 percent next year, the minister said recently.
(1 US dollar = 3.32 ringgit)
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