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.

3 Responses to “[2605] How well does the government project its expenditure?”

  1. on 01 Oct 2012 at 20:17 hishamh

    🙂

    Try the same exercise with revenue.

  2. on 01 Oct 2012 at 22:59 moo_t

    Nice statistics tricks. As above hishamh mentioned, try put the revenue value into the chart.

    Same trick works for “huge rebound”. lol.

  3. […] article by an old colleague of mine, Mr Hafiz Noor […]

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