Heads must roll over budget review
The prime minister was horribly advised, and whoever that did it did so against the analysis of the IMF, the Economist Intelligence Unit and even the multitude of analysts both internationally and locally who mentioned otherwise.
Hafidz Baharom, The Heat Malaysia
Now that Prime Minister Datuk Seri Najib Razak has announced that the 2016 Budget needs reviewing, there needs to be some contemplation on whether he is being advised by people who actually know what is going on.
In the case for review, the prime minister is saying that it is due to the further fall of oil prices.
For some reason, while the international community targeted that the price of crude oil would continue to drop throughout this year and even 2017, someone in this government managed to be convinced that the price would go over US$40 per barrel.
Due to this huge margin of error, the budget now need to be reviewed to reflect the oil prices averaging between US$20 and US$30 throughout 2016 — a deficit of some US$10 to US$20 per barrel.
This will lead to even more subsidy cuts, of course, but it must also lead to more heads rolling in the administration itself. Whosoever gave this government the great expectation that oil prices would go up this year was clearly out of his or her mind.
And for those who may not know what is going on in the oil sector, I will explain it briefly. A cartel of oil producers is flooding the market with excess production in order to bankrupt their competitors. In this case, it is the traditional oil-producing nations trying to bankrupt the newly established shale oil producers.
As such, oil and gas companies are all suffering from lower revenues that do not even cover their cost of production, thus leading to layoffs, salary cuts and shutdowns.
But why is this government affected so bad? Because as diversified as our industrial sectors are, our federal government revenue is still highly dependent on the income received from our state-owned oil company, Petronas.
Our government gets almost a third of its revenue from oil and gas. It has been trying to diversify its revenue streams but let us admit that 30 per cent is heck of a lot of money to be taken in from petrol, especially when it is now averaging half its price on the market compared to last year.
One would think that since such a huge chunk of our income was coming from petroleum, someone would be forecasting it with proper input instead of staring at a crystal ball or repeatedly listening to “Everything is Awesome” from the Lego Movie.
