The Government had been forced to revise its Budget 2016 three months after tabling it in Parliament due to the continuous decline in global crude oil prices.

The recalibrated Budget 2016 saw the Government lowering its average-price assumption for Brent, which is the international oil benchmark, to $30-$35 per barrel, compared with $48 per barrel under the original Budget 2016 when it was unveiled in October last year.

Under the recalibrated Budget 2016, the Government’s revenue is expected to decline by 3.5 per cent-4.2 per cent to 216.3-217.9 billion ringgit, compared with the originally estimated 225.7 billion, while its total spending (operating and development expenditure) will be cut by 3.0 per cent-3.6 per cent to 255.7-257.2 billion from the initially proposed 265.2 billion.

“Most of the forecasts by analysts and research institutes expect oil prices to average at $30-$40 per barrel this year. But we have taken a more conservative estimate of $30-$35 per barrel.

“If it goes below $30 per barrel, we can still sustain economic growth; it won’t affect the budget that much, given the various mechanisms we have at hand,” Irwan said.

Brent crude was traded at around $33.50 per barrel yesterday. Last week, prices of the commodity fell to a 13-year low of around $28 per barrel.

Irwan said the Government was expecting additional income from various sources to act as “buffer” if oil prices declined further.

He pointed out that the Government had yet to add this additional income into its revenue projection for the revised Budget 2016.

Among the new measures expected to generate extra income for the Government were the sale of telecommunications spectrums and greater reinforcement to reduce leakages in duty-free islands such as Labuan.

As for managing its expenses, Irwan said the Government would continue to optimise and slash unnecessary spending to manage its operating expenditure; and prioritise high-impact projects and programmes for the country’s growth and people’s well-being, while postponing non-critical projects to manage its development expenditure.

“In terms of reprioritising our development expenditure, what we are going to do is to go further into project-implementation planning.

“There are some projects that will be shifted to beyond 2016 but some important projects that will have an impact on people such as rural roads, schools and hospitals will continue to be implemented,” Minister in the Prime Minister’s Department Datuk Seri Abdul Wahid Omar said.

Wahid, together with Irwan and Bank Negara governor Tan Sri Zeti Akhtar Aziz, were the three panellists at the forum yesterday.

Essentially, Wahid said, the Government would continue to pursue its overall fiscal consolidation targets.

On that note, the fiscal-deficit to gross-domestic-product (GDP) target for 2016 remained unchanged at 3.1 per cent under the revised budget.

Malaysia’s GDP growth, however, had been revised to a narrower range of 4.0 per cent-4.5 per cent for this year, compared with 4.0 per cent-5.0 per cent under the original Budget 2016.

“We have detected moderation in domestic demand,” Zeti said. “The key to support domestic demand is to boost private consumption by putting money into the pockets of consumers through income transfers,” she added.

She pointed out that the newly introduced measure to allow employees’ EPF contribution to be reduced by 3 per cent between March 2016 and December 2017 was one of the ways to boost consumer spending.

However, she stressed: “These measures are only temporary because retirement savings are important.”