The government announced that it hopes to reduce its budget deficit to four percent of gross domestic product in 2004 from 5.3 percent last year.

Deputy Finance Minister Putera Awang said this would be the result of prudent expenditure and higher revenue, which rose to RM93 billion last year from RM62 billion in 2000, he was quoted as saying by Bernama news agency in Parliament yesterday.

Prime Minister Abdullah Ahnmad Badawi recently said the government would undertake development projects to fuel growth but it would be done in a prudent manner to control the budget deficit.

"If we spend lavishly without taking into account the budget deficit, it would bring about negative effects to us all," he said.

The government has been cutting back on big projects since Abdullah, who is also finance minister, took over last October from his predecessor Mahathir Mohamad, who had a penchant for grandiose schemes.

Malaysia's economy is forecast to expand by six to 6.5 percent in 2004 up from 5.3 percent last year.