Fiscal deficit challenge

Alliance Research chief economist Manokaran Mottain said the 2016 fiscal deficit target of 3.1% could be hard to achieve if the oil price remains low.

PETALING JAYA: Malaysia’s target of having a fiscal deficit of 3.1% would be challenging and a possible revision to Budget 2016 could happen should oil prices continue to hover at current levels of about US$40 per barrel, according to economists.

These concerns have cropped up because the federal government had assumed Brent crude to be at US$48 per barrel when it unveiled Budget 2016, while the outlook for oil prices was negative based on the current international scenario. Brent’s current price of US$40.75 is 15% below the budget’s estimates.