KUALA LUMPUR - Malaysian Prime Minister Najib Razak announced an expansionary budget targeted at his vote bank on Friday, as he looks to shore up support ahead of a tough election that must be called by next year.
"I stand here today... to bring happy news that will put a smile on everyone's faces," Najib said as he delivered his budget speech in the parliament.
Najib said Malaysia plans to spend 280.25 billion ringgit (S$90.5 billion) in 2018, up 7.5 per cent from this year's allocated budget of 260.8 billion ringgit.
Before the speech, Najib said the budget would be "mildly expansionary". Analysts had predicted increased spending on handouts and infrastructure projects.
Malaysia's improved economic performance and revenue collection this year, aided by higher oil prices, facilitates Najib hiking spending ahead of elections.
Despite increased spending next year, the fiscal deficit is seen narrowing to 2.8 per cent of gross domestic product in 2018 from the projected level of 3.0 per cent this year.
Growth is expected to come in at 5.2 to 5.7 per cent this year, on robust exports and some recovery in global crude prices, the government's annual economic report said. In 2016, the economy expanded 4.2 per cent.
The economic report, released in conjunction with the budget speech, said growth next year is forecast to be 5.0-5.5 per cent.