utrajaya will still be able to maintain its budget commitments in 2016 and the delivery of services even if oil prices drop below US$30 per barrel and further reduce government revenue, the Finance Ministry said. Its secretary-general Tan Sri Mohd Irwan Serigar Abdullah said the government was expecting extra revenue from new measures announced in today’s budget recalibration to act as a buffer if oil prices fall further. The changes to Budget 2016 were done with the assumption that oil prices would hover between US$30 to US$35 per barrel throughout the year.
This is down from the US$48 per barrel when the budget was tabled in October last year. Some of the new measures that could generate extra revenue include opening bids for telecommunications spectrums, plugging leaks in tax-free islands such as Labuan, and restructuring the sale of cigarettes and liquor from those areas. The increase in foreign tourists due to visa exemptions this year for selected countries such as China is also expected to boost revenue, said Irwan. “If the oil price goes below US$30 per barrel, we are still safe as we have additional revenue coming from other sources. “We can still sustain the economy and still sustain (the government’s) delivery,” said Irwan at a forum on the recalibrated budget at the Putrajaya International Convention Centre today. However, he said the extra income was not added into the revenue projections of the recalibrated budget because the budget would stick to its original estimates. Irwan said cuts to the budget were expected to total RM9 billion, where RM5 billion was supposed to come from development spending and RM4 billion from operating expenditure.
Non-critical projects would also be shelved, but public amenities such as rural roads, schools and hospitals slated for this year will continue to be built. “All ministries will work towards these targets but it will not affect the delivery of services or their payroll. But they will be making cuts such as no more first class travel for senior officers and no more food at public functions.” Asked what the government would do if oil prices dipped further to below US$25 to US$20 per barrel, Irwan said: “We expect that it can go down till even US$25 per barrel, but if it goes down to 20 it will be a world recession. Every oil producing country will be in trouble.”(SHERIDAN MAHAVERA)
Link: http://www.themalaysianinsider.com/malaysia/article/putrajaya-says-can-still-deliver-if-oil-price-below-us30-per-barrel
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