Brunei - $5.9 billion budget proposed

$100m increase to build human capacity and expertise

A NATIONAL budget of $5.9 billion has been proposed for the 2012/2013 fiscal year, while the domestic economy has been projected to grow by 2.6 per cent this year amidst economic problems faced globally, the Second Minister of Finance at the Prime Minister's Office said yesterday.

The addition of $100 million to this year's budget of $5.9 billion, compared to the $5.8 billion approved for the 2011/2012 fiscal year, was "largely dedicated" to building human capacity and expertise.

The budget has been formulated with the theme, pembangunan kapasiti untuk menjana pertumbuhan yang inklusif dan berdayatahan or "development of capacity to generate inclusive and sustainable growth".

It was also hoped that greater business activity and investment including development of small and medium enterprises, attracting multi-national companies and foreign direct investment would be further encouraged through the various programmes and projects to be implemented with the allocated funds. Presenting the proposed budget during the fifth day of the Legislative Council (LegCo) proceedings, Yang Berhormat Pehin Orang Kaya Laila Setia Dato Seri Setia Hj Abd Rahman Hj Ibrahim said that Brunei's economy experienced "strong growth" last year.

"The national economy, from January 2011 to September 2011, grew by 2.2 per cent year-on-year," he said.

During the same period, the total value of exports rose by 27.3 per cent year-on-year, while inflation was recorded at a "moderate" two per cent, the minister added.

Looking ahead to the course of this year, however, YB Pehin Dato Hj Abd Rahman spoke of problems facing the global economy such as the state of the American economy and "fears"that the Eurozone crisis could spread, apart from concerns of the effects of an increased 6.2 per cent inflation rate on developing and emerging economies.

Overall, global economic growth was predicted to reach a revised estimate of 3.3 per cent, according to the International Monetary Fund, which had earlier estimated a figure of four per cent growth. Global trade was also expected to decline to 3.8 per cent.

"Even though the prospects of the economy abroad seem challenging, the Department of Economic Planning and Development at the Prime Minister's Office anticipates that the domestic economy will be strengthened with the rise in consumption, and investments from the government and private sector," YB Pehin Dato Hj Abd Rahman said.

The Ministry of Finance has projected a revenue estimate of $6,287,940,000 for the 2012/2013 fiscal year, which took into consideration the global factors, revenue collected during the 2011/2012 fiscal period and the projected government revenue to be generated from the oil and gas sector, he explained.

"This includes an estimated revenue from the oil and gas sector of $5.521 billion, (or) 87.8 per cent (of total national revenue), and $766.94 million, (or) only 12.2 per cent from the non-oil and gas sector," he said.

"This total represents an increase of $389 million, compared to the (previous national revenue) estimate for the fiscal year 2011/2012." The minister, however, cautioned that revenue from oil and gas sector was "very difficult" to predict given the factors that were beyond government control such as the national production level of oil and gas, global price and demand of oil, costs of exploring and extracting oil and gas, as well as the exchange rate of the American dollar.

Given the revenue from the natural resources made up most of the government budget, Pehin Dato Hj Abd Rahman called for prudent spending by government agencies towards achieving "fiscal sustainability", as he pointed out that government expenditure continued to rise with each year.

"Because of this, it is fitting for efforts to continue in controlling the level of spending, from continuing to rise, taking into consideration the government revenue, which is still largely dependent on profit from the oil and gas sector," he said.

The minister added that economic diversification efforts needed to be intensified so that the "alternative" source of revenue from the non-oil and gas sector was able to "progressively" compensate for the revenue that would have been generated through the export of the fossil fuel. The budget has yet to be approved by the LegCo members, who are expected to convene again this morning to debate the topic.

UBAIDILLAH MASLI

The Brunei Times

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