October 1st, 2012 by Hafiz Noor Shams
After reading a number of commentaries in the market, in the Malaysian econosphere and various research houses’ research papers, I became curious of the accuracy if government projection with respect to its finance. I was also curious at how serious I should take the government’s plan to cut its expenditure.
So, here is part of the answer.
Below is the percentage deviation of actual total expenditure from budgeted expenditure all the way back to 2000. I obtained the budget data from various Economic Reports published by the Ministry of Finance and the actual expenditure from BNM Monthly Statistiscal Bulletin.
On average, the government underestimates its own expenditure by 8.6%. From the graph, it is quite clear that there is a unrandom negative bias in the projection. Even if you remove 2008 (which is an outlier, and potentially 2009 too), the average does not change by much.