JANUARY 18 — The Budget 2015 passed in the Parliament last year was based on the then international crude OIL price and economic circumstances. However, the international crude oil price has fallen sharply since end of last year and ringgit has also faced depreciation. Together with the most severe flood in history hitting the east coast of Malaysia, the Budget can no longer cope with the current situation and huge changes of the economic environment. It is necessary to make appropriate amendments to it, or it could bring more worries to the country's economic situation, which has already been filled with uncertainties.

The atmosphere of cautious spending could now be felt in the civil society. The market is quiet even though the Chinese New Year will be celebrated next month. Everyone is observing and waiting.

Adjusting the Budget will have a huge impact on the country's economic and development planning and thus, it must be handled carefully. It has not been finalised how the government is going to amend the Budget, but the general market view is, reducing spending is inevitable and only by this, the government could save an enormous amount of administrative expenses, so that the money can be used on other areas which are in more urgent need of the money.

The international crude oil price was as high as US$100 (RM355) a barrel last year. Despite the high retail prices for petrol and diesel fuel in the country, the oil revenue was relatively high, too. Currently, the international crude oil price fell to around US$64 a barrel and might even further fall to US$41, leading to the fall of petrol and diesel fuel retail prices in the country, so that the people no longer need to bear high fuel prices. However, it also reduces the oil revenue accounting for 30 per cent of the country's total revenue, directly affecting the country's operation and development.

Although the Goods and Services Tax (GST) which has long been prepared will be implemented in April this year, it is afraid that it still cannot make up for the huge losses caused by the reduced oil revenue. In any case, the GST has been seen as a more comprehensive and efficient tax system and it is believed that it will not be halted but will be implemented as scheduled. The government must adjust the Budget from other aspects, including making adjustments to other taxes, or delaying the implementation of some measures.

It is generally believed that the government would cut spending and postpone major projects. The government must try to save every penny in terms of daily expenses, while substantially cut the huge civil service team to reduce the government's operating expenses. The proportion of civil servants in the country is one of the highest in the world. Public opinion, community organisations and political parties have long called on the government to improve the redundancy phenomenon in the public service system, so that the resources can be spent on other areas in more urgent need. Major projects to be halted could only be those not that urgent, but for projects that can help drive economic development like the MRT project, they must be completed as soon as possible.

This is also the time to review the form and amount of BR1M cash assistance programme, so that the resources could be used to help those who need it more, particularly flood victims. Reconstruction is a thorny problem and the government must think and plan how to use resources more efficiently.

We shall discover how the government adjust the Budget next Tuesday. In any case, in the face of changing global economic situation, the government urgently needs to think how to diversify national INCOME sources, including how to continue promoting various projects driving the development of national key economic sectors, to stabilise national economy and create wealth for the benefit of the people. — Sin Chiew Daily

* This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail Online