Malaysia Faces Revenue Crunch as Spending Mounts on Virus Woes

Malaysia will enter 2021 with its biggest spending plan yet to spur its virus-hit economy, but concerns are focusing on how to foot the bill after a sovereign-rating downgrade earlier this month.

The government expects revenue to rise 4.2% next year, counting on higher tax collections -- without raising taxes or introducing new ones -- coupled with a move to slash its dependence on oil. The plan hinges on one key assumption: that tax income will rise as economic activity returns close to normal.

“If the economy does not recover as strongly as the 6.5%-7.5% that the government is expecting, ...