The government has proposed an allocation of RM100.52 billion for the 2002 budget, an increase of 10.4 percent over the previous year to strengthen growth rate and ensure an equitable distribution of wealth.

Prime Minister Dr Mahathir Mohamad said out of the total proposed budget, RM66.98 billion is for operating expenditure and RM33.54 billion is for development expenditure.

Mahathir said the budget had three main strategies: strengthening growth; diversifying the sources of growth; and ensuring an equitable distribution of wealth.

"Taking into account the revenue estimates of RM73.4 billion, the overall federal government account is estimated to record a deficit of 5 percent of GDP, amounting to RM18.6 billion in 2002," added Mahathir, who is also Finance Minister.

Of the proposed total development expenditure, he added, RM13.11 billion or 39.1 percent is allocated to the economic sector, including rural development, agriculture, infrastructure, industrial, rural electricity and water supply projects.

"An amount of RM12.21 billion or 36.4 per cent is allocated to the social sector, that is, for education and training, health, welfare and community development as well as projects for youth and sports," said the premier.

"In addition, RM3.31 billion or 9.9 per cent is allocated for the security sector and RM29.1 billion or 8.7 percent is allocated for the general administration sector and the balance of RM2 billion or 5.9 percent is for contingencies reserve," he added.

Petrol and cigarettes

The budget also had some good news for the country's 850,000 civil servants who were awarded a half-month salary bonus or a minimum of RM1,000 along with a 10-percent salary increase next year.

The premier also announced a range of tax cuts aimed at stimulating business, with reinvestment undertaken by existing agriculture companies to be granted 100 percent tax exemption against statutory income for five years.

Import duties on 55 products long protected are to be reduced to between 10 percent and 50 percent, down from between 20 percent and 105 percent.

However the prices of petrol and cigarettes will go up.