Budget 2016 may be reviewed if oil price stays low, says minister


(Malay Mail Online) – Putrajaya may have to review Budget 2016 if oil prices remain low, a minister said as crude oil is trading at just above US$37 (RM156) a barrel, lower than the government budget’s projection of US$48.

“In the event that oil prices remain at low levels, the govern­ment might have to review the Budget as it will need to focus on the optimisation of the country’s growth,” Minister in the Prime Minister’s Department Datuk Seri Abdul Wahid Omar was quoted by English daily The Star as telling reporters after delivering a lecture titled Economic Outlook: The Way Forward for Malaysia.

Budget 2016, which was tabled in Parliament last October, was based on a projection of crude oil prices at US$48 per barrel.

The government budget for next year had projected oil and gas related revenues to contribute 14.1 per cent of total revenue in 2016, down from 19.7 per cent this year.

In October, Brent Crude prices peaked at just above US$52 per barrel, but have since seen a decline, currently trading at just above US$37 per barrel.

Abdul Wahid reportedly said there were many factors that affected global oil prices and that the government would not be able to keep readjusting the Budget based on fluctuating oil prices.

“Not all oil fields will be able to produce at such low prices. As high cost producers cease operations, supply will come down again. Hope it will recover some time next year,” he was quoted saying.

Oil prices have been seeing a downward trend since July last year, before which Brent Crude peaked at US$115 per barrel in June.