THE government's fiscal deficit target of four per cent for 2013 is within reach due to the overly conservative revenue forecast, Malaysian Rating Corp Bhd (MARC) said.
The revenue forecast will likely be exceeded in 2013, MARC said.
It added that the government has been underestimating its revenue by an average of RM8 billion per year over the past 10 years, except for the recession years.
"Although the expenditure forecast may also be on the low side, we do not think that this will be detrimental to achieving the deficit target," it said.
MARC said the government's deficit target is achievable because it will take only RM5 billion to reduce the deficit by 0.5 percentage points.
"The biggest wildcard, however, will be global oil prices, with the government expecting a moderation in 2013.
"If global growth recovers more strongly than expected, petrol and gas subsidies will necessarily increase beyond the budgeted amount," said MARC in its report on the 2013 Budget yesterday.
Prime Minister Datuk Seri Najib Razak said last Friday the government is committed to further reduce its budget deficit to four per cent in 2013 from 4.5 per cent in 2012.
Public Investment Bank said the budget has a little something for everyone but not at the expense of blowing its coffers and putting at risk Malaysia's sovereign rating, which is being scrutinised due to rising government debt levels.
JF Apex Securities Bhd commented that the budget deficit target for 2013 is in line with the government's effort to achieve a three per cent budget deficit by 2015.
The government, it noted, is also committed to maintain the nation's debt to gross domestic product (GDP) ratio at below 55 per cent, with a projected 53.7 per cent in 2012.
"We feel relieved that the foreign debt has trended lower at 28.8 per cent as of June 2012, which is below the threshold level," it said.
OSK Research, in its daily note yesterday, said while the lower projected deficit fits into the prudent approach to meet the three per cent target in 2015, "we suspect that this could prove challenging to achieve without an accompanying acceleration in fiscal reforms".
It said among these reforms are the introduction of the goods and services tax (GST) to broaden the tax base and reduce the country's reliance on petroleum revenue, which still accounts for about 30 per cent of total revenue.
Another hard issue that needs to be given attention is weaning off Malaysians of subsidies, particularly for fuel, to further reduce expenditure.
"While the budget did not seem to set out such action plans, we still hope that the government will take bolder steps along this direction once the polls are out of the way," said OSK Research.
On the local stock market, the FBM KLCI yesterday closed 6.65 points higher to 1,643,31, a minor rally after gaining 8.82 points, or 0.54 per cent, on Friday.
An analyst said the business-friendly budget did lift market sentiment on Friday but the market's overall performance was rather mixed yesterday.
"I am expecting the trend this week to be quite positive, driven by not just local development but also the United States jobs data and Spain's budget, which is expected to deal with its debt problems," said the analyst.