The proposed budget for Financial Year 2020/2021 is BND5.86 billion. The estimated government revenue for the Financial Year 2020/2021 is projected to be BND4.05 billion, in which revenues from the Oil and Gas Sector are estimated at BND2.91 billion, while the Non-Oil and Gas Sector is estimated at BND1.14 billion. Therefore, the national budget for the Financial Year 2020/2021 is expected to experience a deficit of about BND1.81 billion.
This was stated by Minister at the Prime Minister’s Office and Minister of Finance and Economy II Yang Berhormat Dato Seri Setia Dr Awang Haji Mohd Amin Liew bin Abdullah in budget deliberation for Financial Year 2020/2021 at the third day of the 16th Legislative Council session yesterday.
However, gross domestic product (GDP) forecasts and estimated revenue did not consider the current situation with oil prices declining. As such, the country’s economic position will likely to be affected and government revenue will be lower than the estimated amount, which can cause a bigger deficit.
Yang Berhormat Dato Seri Setia Dr Awang Haji Mohd Amin Liew said BND1.99 billion or 33.9 per cent of the total allocation to finance salaries, allowances and contribution payments of 67,126 government employees is allocated for Employee Salary.
Around BND2.01 billion or 34.3 per cent is allocated for Repeated Spending. BND365.43 million is for government asset maintenance, BND217.65 million for education; BND160.13 million for rental; payroll and allowance for 11,251 Open Vote and Daily Paid employees (BND 136.18 million); and Operating Expenditure (BND134.89 million).
Development Expenditure is maintained at BND800 million or 13.7 per cent; and the rest is to finance approved expenses.
The minister also said the Department of Economic Planning and Statistics (JPES) of the Ministry of Finance and Economy (MoFE) has projected the country’s GDP growth this year to expand between 4.9 per cent to 7.1 per cent due to the growth of several priority sectors such as the Agriculture, Forestry and Fisheries, Industrial Sectors, and Service Sectors.
The JPES reported that the country’s GDP growth for Brunei Darussalam for 2019 is up 3.9 per cent compared to 0.1 per cent for 2018. The Oil and Gas Sector recorded an increase in growth of 4.9 per cent and the Non-Oil and Gas Sector expanded at 2.5 per cent. This is the highest GDP growth ever since 2006.
For 2020, the International Monetary Fund (IMF) has projected the country’s GDP growth at 4.7 per cent, taking into account the first production of the downstream Oil and Gas industry for the Oil and Petrochemical Plant Project in Pulau Muara Besar (PMB) as well the construction of Brunei Fertilizer Industries (BFI) plant.
Meanwhile, ASEAN+3 Macroeconomic Research Office (AMRO) has projected growth at a rate of 3.7 per cent and the Asian Development Bank (ADB) also projected positive growth at 1.5 per cent.
The government’s fiscal position for the Financial Year 2018/2019 indicted that the government’s revenue collection increased by 55.7 per cent to BND6,027.26 million, compared to BND3,872.27 million in the previous financial year. This was due to increase in revenue from the Oil and Gas Sector by 63.8 per cent to BND4,873.37 million compared to BND2,975.73 million in the Financial Year 2017/2018.
Revenue from the Non-Oil and Gas also increased by 28.7 per cent, to BND1,153.89 million compared to BND896.54 million in the Financial Year 2017/2018, while government spending for the Financial Year 2018/2019, decreased by 1.32 per cent to BND5,999.34 million compared to BND6,079.29 million in the Financial Year 2017/2018.
Following the increase in revenue and the decrease in government spending for the Financial Year 2018/2019, the nation recorded budget surplus of BND27.92 million compared to the budget deficit in the Financial Year 2017/2018 of BND2,207.02 million.
For the Financial Year 2019/2020, until February 29, 2020, government revenue collection is estimated at BND3,453.94 million of which BND2,787.79 million came from the Oil and Gas Sector and BND666.15 million from the Non-Oil and Gas Sector. Government spending is BND4,923.80 million, which recorded budget deficit of BND1,469.86 million. This is due to the decline in revenue collection from the Oil and Gas Sector of about BND779.89 million.
Yang Berhormat Dato Seri Setia Dr Awang Haji Mohd Amin Liew also said according to World Economic Outlook (WEO) reports from IMF in January 2020, global economic growth for 2019 stood at 2.9 per cent.
This is lowest growth lowest since the global financial crisis 2008-2009. This was due to the negative shock to economic activity in some developing countries (especially Brazil, India, Mexico, Russia and Turkey) and geopolitical tensions that are rising especially between the United States and Iran as well as increasing social unrest and deteriorating trade relations between the United States and its trading partners.