Economy not in crisis, PM says in Budget revision

KUALA LUMPUR, Jan 20 —The country’s economy is not facing any immediate emergency, Prime Minister Datuk Seri Najib Razak said today ahead of announcing “interventions” to Budget 2015 necessitated by a sharp drop in global oil prices.

Putrajaya has been under pressure to revisit its Budget for 2015 that was drawn up when oil price was above US$100 (RM355). This has since fallen to US$50 and below.

"I’m here today to announce specific and proactive measures. We are not in crisis.

“We are taking preemptive measures following changes in global economic landscape which is beyond our control.” Najib said at the start of his announcement today.

He unveiled today a host of spending cuts to Budget 2015 aimed at helping Malaysia weather oil prices that have fallen by more than half since last year.

Facing a drop in government revenue of RM8.3 billion, Putrajaya is targeting to reduce operational expenditure by RM5.5 billion in order to reduce the government’s chronic overspending.

Najib also said efforts will be made to boost tax collection by encouraging more companies to register under the Goods and Services Tax, saying that this could help the government rake in RM1 billion more in taxes.

He said that the government stood to save RM10.7 billion by removing direct fuel subsidies for the public and using the managed float mechanism for RON95 petrol and diesel.

Without today’s spending cuts and budget adjustments, the budget deficit would hit 3.9 per cent instead of the 3.0 per cent targeted last October, he said. The government is now setting a target of 3.2 per cent in budget deficit for this year.

In what appears to be a bid to keep the economy pumping, Najib confirmed today that no cuts would be made the RM48.5 billion allocated for development expenditure.

Major infrastructure projects such as the second phase of the Mass Rapid Transit project, Light Rail Transit extension and the planned high-speed rail link connecting Kuala Lumpur and Singapore will carry on as scheduled, he said.

He also confirmed national oil giant Petronas’s Refinery and Petrochemicals Integrated Development project in Pengerang, Johor will still be carried out.