Moves to adjust Budget practical, say economists, businessmen

Economists and businessmen said the proposals to adjust the 2016 Budget given the slump in oil prices which affected the government revenue were practical.

They said the adjustments were based on the reality of the current economic situation since the moves will determine the behaviour and ultimately the resource allocation decisions.

Prime Minister Datuk Seri Najib Razak, in his address at the Finance Ministry here on Friday, said adjustments to Budget 2016 will be tabled soon amid a challenging new year.

He said the adjustments will involve, among others, measures to optimise expenditure, taking into account the role of government-linked companies and having the government continue to champion the well-being of the people.

"When it comes to budgeting, there are areas which are not within our control, such as the drop in oil prices," he said.

Bank Islam Malaysia Bhd Chief Economist, Dr Mohd Afzanizam Abdul Rashid, said the government needed to be realistic and, to a large extent, the economic cycle has to be considered as well when making the assumption.

"So far, the government has taken the necessary steps to ensure the country would be able to cope with such challenges by reducing their dependence on oil-related revenue," he told Bernama here Friday.

He said the share of oil revenue's contribution to the government has declined from 41 percent in 2009 to an estimated 14 percent in 2016.

However, he said, Malaysia was relatively better compared to the Gulf Cooperation Council countries where oil revenues accounted for over two-thirds of the total government revenue.

On the implication of budget adjustments to Malaysia's fiscal deficit target this year at 3.1 percent, Mohd Afzanizam said: "Slightly higher revision would not be too bad for development expenditure."

He said the consumers were expected to remain cautious in their spending due to weak sentiment.

"Therefore, we need some catalysts to ensure economic growth will not be severely affected," he said.

Meanwhile, Jobstreet.com Country Manager, Chook Yuh Yng, said the adjustments reflected the realistic economic situation of 2016 and were vital to ensure it was under control.

"At these challenging times, it is vital to look at how to make the situation better. Anything that can improve the country's competitiveness is welcomed especially with the ASEAN economy opening up," she told Bernama.

Agriculture and Agro-based Industries Minister, Datuk Seri Ahmad Shabery Cheek, said he will make sure the incentives for small farmers and fishermen will not be affected in the budget adjustments.

He said these incentives should be maintained to help farmers and fishermen face high costs of living.