Brunei deficit may surpass $2.3b amid weak oil prices

Fitri Shahminan and Rachel Thien
BANDAR SERI BEGAWAN

GOVERNMENT earnings have dropped about 70 per cent compared to the revenue it received in the 2012/2013 fiscal year, the second finance minister said yesterday.

Yang Berhormat Pehin Orang Kaya Laila Setia Dato Seri Setia Hj Abdul Rahman Hj Ibrahim said Brunei could post a larger deficit than the previous projection of $2.28 billion shortfall in the current financial year if global oil and gas prices continue to fall.

YB Pehin Dato Hj Abdul Rahman, who is also minister at the Prime Minister’s Office (PMO), said the government has already hit over $1.6 billion in deficit as of December 2015.

The 2015/2016 financial year will end on March 31, 2016.

The minister said falling energy prices have severely hurt Brunei’s economy and the government’s ability to spend money.

“With heavy reliance on oil and gas which accounts for 90 per cent of the government’s revenues, the sinking global oil and gas prices have significantly affected the government’s income,” he said at the opening of the Enterprise Open Day for Small and Medium enterprises (SMEs).

During the 11th Legislative Council meeting in March last year, YB Pehin Dato Hj Abdul Rahman had said Brunei was projected to run into a deficit of $2.28 billion for fiscal year 2015/2016, as falling global oil prices are expected to continue hurting the sultanate’s revenue from its main source of income.

Total government revenue had been projected to decrease by $1.572 billion in the current fiscal year, according to a report last year.

The minister said in the 2014/2015 fiscal year, Brunei’s deficit was at $213 million.

In reality, the decline in revenue will affect the way the government spends, said YB Pehin Dato Hj Abd Rahman.

Therefore, prudent and unwasteful steps must be continuously implemented to reduce government expenditure so that the deficit can be reduced and the country’s finance is sustainable.

Towards that, the public must accept the fact that the government’s capacity to spend money will be limited, the minister added.

He said future government expenditure will be made based on priority, needs and the government’s capability to spend as well as its significance in generating economic activities and providing job opportunities to locals.

The minister added that the mindset of relying on government’s assistance and initiatives must be replaced with hard work and independence.

YB Pehin Dato Hj Abd Rahman called on the government to intensify efforts to diversify the country’s economy in the wake of weak global oil prices.

Strategies such as attracting more foreign direct investments and strengthening local small and medium enterprises should be implemented.

Global economy is currently shrouded with uncertainty and challenging especially for oil producing countries, the minister continued.

“Since June 2014, we have observed the plunge in global oil prices from US$122 per barrel to below US$30 per barrel,” he said.

At press time yesterday, oil prices hovered around US$30.10 per barrel.

“The drastic drop in global oil and gas priced has severely affected the revenue of oil producing countries, resulting in them bearing huge financial deficit. This has also made some of these countries to drastically cut their respective budget allocation.

This includes steps to reduce the subsidy rate for essential goods such as petroleum products and electric power supply.

To increase revenue, some countries are imposing new taxes that have never been imposed previously, such as goods and services tax (GST), he added.

The Enterprise Open Day, organised by the Energy and Industry Department at the Prime Minister’s Office, aimed to increase awareness of the various enterprise support services as well as identify issues faced by entrepreneurs in Brunei.

The three-day event, held at the Design and Technology Building located in the Anggerek Desa Technology Park, will end tomorrow.


Sumber - The Brunei Times