Challenges to Reduce Budgetary Slack Creation in Developing Economies

Abstract

The public budget plays a vital role for the government in ensuring the stability of the country's economy and achieving the objectives of social development. A well-planned budget is therefore essential to ensure the achievement of these objectives and the well-being of the public. However, the public budget has been criticised for non-optimal expenditure and inefficient allocation of public resources. Examination of budgetary laxity in government organisations may be useful in reducing budget laxity. Budgetary slack is a common practise between officials and organisations, even though it is dysfunctional towards organisations. The main objective of this paper is to identify the challenges of reducing Malaysia's budget deficit. This paper suggests that the challenge of reducing the budget deficit lies in the lack of budgetary control, red tape, political negotiation and tightening of the budget. Top management should therefore highlight these issues, design and implement sound management control.