The impact of the drop in world crude oil prices on government revenues and finances is relatively minimal, considering that the government has gradually reduced its dependency on oil and gas revenues, said Datuk Seri Abdul Wahid Omar.

The Minister in the Prime Minister's Department said one of the sustainability elements in government finances was to reduce its reliance on oil and gas revenues.

"In 2011, our revenue from petroleum was at 35.8 per cent of total revenue, this was brought down to 33.7 per cent in 2012 and to 31.2 per cent last year.

It is hoped that the dependency would be reduced to below 30 per cent," he said.

Abdul Wahid said on top of that, the government had also benefited from the lift of fuel subsidies and believed the drop in oil revenues would be more than compensated via savings in the fuel subsidies.

He was speaking to reporters on the sidelines of the ACCA's Malaysia Sustainability Reporting Awards 2014 here today.

The government had managed its finances in a sustainable basis and it was on track to bring the budget deficit to 3.5 per cent by year-end and three per cent by next year in order to achieve a balanced budget by 2020, he said.

Commenting on the International Monetary Fund's report that Malaysia could achieve a budget deficit of below three per cent by this year, Abdul Wahid said the government would have to balance its revenues and expenditures.

"The idea for expenditure is not to reduce the amount per se but to optimise and allocate the expenditure to prioritise for important developments and items that were necessary," he said.

On the decision to float the fuel prices, he said the move was timely as the global oil price is on a downtrend currently.

He said the price would be revised on a monthly basis, which is manageable, and would be based on the average prices in the preceding month, as there would be too much fluctuations if the revision was done on a daily basis.