HALISTER1: Najib May Aim for Fiscal Consolidation, Tax Cuts Unlikely: HSBC

Najib May Aim for Fiscal Consolidation, Tax Cuts Unlikely: HSBC

(Bloomberg) -- Malaysia PM Najib is expected to unveil a slightly narrower budget deficit of 3.0% of GDP for 2017 and refrain from announcing out sized figures, Su Sian Lim, economist at HSBC writes in note today
  • 2017 budget to be announced on Oct. 21; next general election must take place by Aug. 24 2018, although politicians have indicated an early election as soon as March with Najib having weathered turmoil over 1MDB
  • This is achievable only if expenditure is kept from over expanding, as revenue is likely to rise by a mere 2% on moderately higher oil prices
  • Small bounce in revenue on the back of higher oil prices will hardly be enough to embolden the govt to deliver personal income tax cuts, much less reduce or abolish GST
  • Expects budget deficit of 3.2% of GDP for 2016 vs govt deficit target of 3.0-3.1% vs 2015 deficit 3.2%
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Lim Su (HSBC Holdings PLC)

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