Budget 2015 is now irrelevant if it is not revised

I call on the Government to use the occasion of Dewan Negara’s sitting to revise Budget 2015.

While Dewan Rakyat had just approved Budget 2015 two days ago on 25th November and Dewan Negera is only beginning to debate the budget next week, it has been overtaken by events and is in danger of becoming irrelevant if it is not revised with the latest oil price.

The price of oil slumped after the OPEC oil producers’ cartel decided not to cut output at its meeting in Vienna. Following the announcement Brent crude hit its lowest since August 2010, falling below $72 a barrel, before settling at $72.82, recording a 5% drop on the day.

The Malaysian Government had planned its budget with the assumption that the crude oil price (Tapis) would average at $110 for 2014 and $105 for 2015.

Thirty percent of government revenue comes from oil. While the Government would save on subsidy payout, the fall in price would cut a lot of revenue. With the decision of OPEC, the downward slide is unlikely to reverse in short time. A bigger budget deficit is almost a certainty with the oil price falling further.

The 12 OPEC members decided to maintain production at 30 million barrels per day as first agreed in December 2011. Crude oil prices have fallen 30% since June on sluggish global demand and rising production from the US.

Dewan Negara is sitting from 1st December till 18th December. It is the last occasion for the Government to show that it is a responsible economic manager by reporting to the Parliament a revised budget for 2015.

The Government must also commit to reduce the new pump price significantly on 1st December and fully discloses the actual formula of what is called “dirty float”.

Liew Chin Tong