The government today said it was maintaining its budget deficit at sustainable levels and that it did not expect a surplus in the near term.

Mustapa Mohamed, minister in the prime minister's office, said the budget deficit was equal to 4.30 percent of Gross Domestic Product (GDP) in 2004 and would be lower this year.

"This year we think we can achieve about 3.8 percent ... and that's in the context of further strengthening of the government's financial position," he told reporters on the sidelines of an Asian economic summit.

"We are controlling the deficit but we are not pushing for a surplus budget in the near term. We've got to be realistic," said Mustapa, who is also executive director of the government's National Economic Action Council.

"What is certain is that this year, next year we are not going to have a surplus budget," he added.

The minister also said GDP growth, which the government has forecast at 5.0-6.0 percent this year, was "helping to maintain the deficit at a reasonable level."

Prime Minister Abdullah Ahmad Badawi earlier this month said that Malaysia will reduce its budget deficit, which has been swollen by years of pump-priming, to ensure stable economic growth.

The government had previously said it hoped to cut the budget deficit to 3.5 percent of GDP in 2005.