Budget 2019 will have a reduced development expenditure, said Prime Minister Dr Mahathir Mohamad.

"Well, the fact is that a lot of the money that we earn, the revenue, must be used to pay off the debts.

"So to that extent, we cannot reduce the operational budget that has to go on. The only way to save money is to reduce the development budget," Mahathir told reporters at a press conference in Parliament today.

However, he said he was not clear on the specifics but that Finance Minister Lim Guan Eng would know so.

Earlier in his speech, Mahathir said the reduction in public pending must not affect economic growth.

Mahathir also said that Putrajaya aimed to have a budget deficit of 3 percent by 2020.

Previously, former prime minister Najib Abdul Razak said his government aimed to have a balanced budget by 2020.

Asked how this new target will affect the stock market, Mahathir said the country will do its best to improve the economy.

"The market will react one way or another but what we are trying to do is improve the performance of Malaysia's economy, logistically and socially.

"If we leave things as they are, the country will go downhill. Because what we inherited from the previous government is a lot of loans, money borrowed more than RM1 trillion.

"We inherited and we have to pay, that is the constraint we face. But even then we can do some development from whatever income we get," he said.