Malaysian Prime Minister Najib Razak will deliver his Budget 2016 speech in parliament at 4pm on Friday (Oct 23).
Analysts say that this budget will be a difficult one for Mr Najib, given shrinking government revenues caused by a sharp fall in commodity prices.
Speaking to market movers and shakers recently, Mr Najib – who is also the country’s Finance Minister - hinted that the Budget 2016 is going to be a tough one, given the fiscal constraints Malaysia is facing with government revenue falling by almost US$1 billion in 2015 after a 40 percent drop in commodity prices .
Still, Mr Najib said he is committed to fiscal consolidation to further shrink the budget deficit targeted at 3.2 per cent this year.
"We are confident of reaching a balanced budget or as close to that as possible by 2020,” he said. “To do this, some hard decisions had to be made."
Analysts expect a further roll back in subsidies, while the hugely unpopular 6 per cent goods and services tax, which was implemented in April, is set to remain.
But measures may be implemented to help with the rising cost of living. The focus will be on the bottom 40 per cent of households which make less than US$1000 a month.
Elsewhere, although only 10 per cent of Malaysia’s working population pay taxes, many are hoping for a cut in personal income tax. And more measures can be expected to restore investor confidence and attract investment, with a possible further cut in corporate income tax.
All this should highlight what Mr Najib says remains a priority – which is safeguarding the well-being of the people.