KUALA LUMPUR, Jan 20 – There is room to adjust the government’s operating expenditure (opex) in line with its commitment to achieve the three per cent fiscal deficit target this year. HSBC Economist for Southeast Asia, Lim Su Sian, said the adjustment was on the backdrop of the impact of falling oil prices on the government’s revenue.
“There is room to adjust the opex. Let’s see exactly which part of the opex that can be cut back,” he said during HSBC’s Economic and Market Outlook 2015 here today. Prime Minister Datuk Seri Najib Razak is set to announce a review of the 2015 Budget tomorrow.
The review and restructuring of the budget were made following the weakening of the ringgit and slump in the global oil prices. Lim said while it was very rigid to predict precisely what changes the government would make, there should be a continuity in capital expenditure spending by the government.
“What could happen is that as the government suffers a decline in the revenue from oil, hopefully it will announce a tweaking on the expenditure side so that we could continue this multi-year progress that we have seen over the last few years in consolidating the budget deficit,” she added.
Lim said HSBC Bank has lauded the government for addressing the economic matters and did not think the administration was late in its response since oil prices started declining in the last quarter of 2014. “It has been placed in a difficult position as no one expected this steep decline in oil prices. “I’m encouraged that the Prime Minister has come out and is communicating with the investing community…It is better than keeping mum and not doing anything,” she said.