Kuala Lumpur, Oct 1 (IANS): The Malaysian government is set to unveil a larger budget for 2016, with an increase in development expenditure and reduction in operational expenditure, a finance ministry official said on Thursday.

Second Finance Minister Ahmad Husni Hanadzlah said the increase in the budget was aimed at spurring the domestic economy in light of the current global climate, The Malaysian Star reported.

"There will be a slight increase in the budget to boost the domestic economy," he said

"However, we will be adopting a prudent fiscal position to ensure efficient expenditure."

"The 2016 Budget is crucial at its the first budget under the 11th Malaysia Plan and one towards becoming a high-income nation by 2020. It is also very challenging as we have to balance between the current global economic situation and ensuring prosperity," he added.

He said Prime Minister Najib Tun Razak will chair a budget meeting on October 7 to discuss the issues highlighted by the respective ministries.

"We have a drafted a budget but will look at all the issues highlighted by the ministries before finalising it," he said.

He added that the government was targeting to reduce its fiscal deficit from 3.2-3 precent next year.