Budget 2016 must be adjusted due to challenging new year

In a statement, HKL said Najib underwent the operation as an outpatient and the prime minister had returned home to rest.

Amendments to the budget will have additional measures to optimize spending and the role of government linked firms, he said, speaking at a meeting with the Ministry of Finance staff.

Brent, the global benchmark for crude oil, has fallen more than 6% since the start of 2016 to $34 a barrel on Friday.

OCBC noted that the USD48/barrel oil price assumption that was adopted in the 2016 Budget looked rationally plausible when it was originally tabled in October past year.

“We have to be prepared and come up with the best way to ensure that our economy remains sustainable”, he said.

However, taking into account the latest developments in oil prices, the government introduced previous year a broad-based consumption tax of six percent, to mitigate losses from Petronas’ dividends.

“Inflation is expected to remain low at 2% to 3%”. The brokerage estimates that every $5 shortfall in oil price from the budgeted estimate will widen the fiscal deficit by about 0.1% of GDP.

Razak acknowledged that Malaysia expects a more challenging global economic situation this year.

“The gross collection was at RM37.67 billion”.

PM Najib, who is also finance minister, said the projected net proceeds from GST at December 2015 are RM27.13 billion (S$8.9 billion).

“The government’s revenue from direct tax is tied directly to the domestic economy and coupled with the uncertainty global outlook and implication from China’s slowdown, we think the government will be cautious in cutting expenditure”, he said.

“Many people are unaware of this and have taken it for granted all this while”, he said.

He the UTCs contributed greatly to the implementation of “People Economy’ programmes which benefited Malaysians a lot”.

Najib also said the transition of the Housing Division to the Public Sector Financing Board on Jan 1 did not involve new policies or changes to the terms of the housing loan scheme.