BANDAR SERI BEGAWAN – The Brunei government is expected to face a budget deficit of $1.469 billion in the 2019/20 fiscal year, despite posting 3.9 percent GDP growth in 2019 – the highest rate in 13 years.
Announcing a proposed budget of $5.86 billion for the 2020/2021 financial year, the second finance and economy minister told Legislative Council (LegCo) members the government is heading towards a budget shortfall for two consecutive fiscal years.
During the 16th LegCo sitting on Wednesday, YB Dato Seri Paduka Dr Hj Mohd Amin Liew Abdullah attributed the projected budget deficit to decreased revenue from the oil and gas sector.
As of February 29, government revenue is estimated at $3.45 billion in the 2019/20 financial year, with oil and gas sector accounting for over 80 percent of total government earnings.
He said Brunei is also projected to run into a budget deficit of $1.81 billion in the 2020/2021 financial year on the back of weak global oil demand and prices.
“With the oil price crash and the challenges that we are currently and will be facing, the country’s economic position will likely be affected.
“The government’s revenue will be lower than previously estimated, which in turn will result in a bigger budget deficit,” he added.
YB Dato Dr Hj Mohd Amin said the global oil demand is set to decrease following the shift of many developed countries towards green and renewable energy.
The minister said data from the Department of Economic Planning and Development showed Brunei’s GDP rising by 3.9 percent last year, compared to 0.1 percent in 2018.
The department also predicted that GDP will increase between 4.9 percent and 7.1 percent in the 2020/2021 financial year.
However, the projected figures do not take into account the COVID-19 epidemic and the slump in global financial markets.
Despite the projected GDP growth, the minister said Brunei is still predicted to face a budget shortfall as government revenue is less correlated with GDP growth in Brunei, unlike other countries with diversified sources of revenue such as income tax as well as goods and services tax (GST).
The proposed budget of $5.86 billion in the 2020/21 financial year remains unchanged from the previous fiscal year.
Spelling out the budget allocation for the 2020/21 fiscal year, YB Dato Dr Hj Mohd Amin said $1.99 billion or 39 percent of the total budget will be spent on 67,126 civil servants’ salary and allowance.
A total of $2.01 billion (34.3%) has been allocated for recurring expenses.
The proposed budget for 11th National Development Plan projects is maintained at $800 million, with accrued expenses taking up the remaining budget.
The government maintained the four main thrusts of the 2019/20 budget in the upcoming 2020/21 financial year, which are increasing investment activity; ease of doing business; generating competent and employable human capital and preserving public welfare.
Some of the key allocations highlighted in the budget readout:
Boosting investment activity
• $40.4 million to open a new rice cultivation area in Kandol, Belait
• $16.7 million to enhance growth in the agriculture and agrifood sector
• $9 million for the development of Brunei Bay (from a total planning cost of $79 million)
• $2.8 million for phase two development of Pulau Muara Besar (from a total planning cost of $43 million)
• $1.7 million for construction of artificial reefs to increase fisheries production
• $8 million for the rice buy back scheme
• $3.3 million for the maintenance of Brunei International Airport terminal and buildings
• $4.45 million to finance the development of Temburong district after the completion of Temburong Bridges
• $9 million to upgrade Gadong and Jerudong markets
• $2.5 million to establish a National Labour Management System
• $2.12 million for the implementation of online payment system for building tax
• $1 million to establish Halal Certification System under the Ministry of Religious Affairs
Employment & capacity-building
• $26.1 million for the i-Ready apprenticeship programme (from a total planning cost of $76.3 million)
• $18.5 million for the Capacity Development Centre (from a total planning cost of $136.1 million)
• 1.5 million for National Service Programme
• $1.4 million for development of youth and NGOs
• $510,000 for the Youth Development Centre
• $8.5 million for the construction of Universiti Islam Sultan Sharif Ali’s new campus in Temburong (from a total planning cost of $100 million)
• $33.4 million to fund the construction/upgrade of government schools (from a total planning cost of $129.6 million)
• $48.8 million in scholarships under Ministry of Education, Ministry of Religious Affairs and Ministry of Defence
• $55.5 million in student allowances under the education and religious affairs ministries
• $1.5 million to support “Program Harapan”, which provides food and drink to underprivileged students
• $2.1 million to employ an additional 41 CfBT teachers for schools with low-English language capacity
• $143.7 million to fund the final phase of the Temburong Bridge project (from a total planning cost of $1.04 billion)
• $11 million for the redevelopment of Kampong Ayer
• $31.7 million to build 1,500 houses in the Kg Lugu National Housing Scheme (from a total planning cost of $150 million)
• $39.4 million to build 1,208 houses in the Tanah Jambu National Housing Scheme (from a total planning cost of $100 million)
• $49.1 million for water supply, drainage and sewerage management projects (from a total planning cost of $200.3 million)
• $10.2 million to improve public transport (from a total planning cost of $21 million)
• $45.2 million to upgrade and strengthen the electrical network system
Public health & welfare
• $100 million for the purchase of medicines
• $14 million for construction of Pandan Health Centre, emergency services building at Suri Seri Begawan Hospital, and a new block at the Sengkurong Health Centre
• $1 million for the development of the online portal for the National Welfare System
• $15 million for natural disasters and disease control, which covers the COVID-19 outbreak and climate change phenomena such as flooding, landslides and forest fires
• $10.87 million for the construction of new mosques (from a total planning cost of $30 million)
In addition to the proposed budget allocation, the minister said a special fund of $18 million will be administered under Miscellaneous Services (Focus Projects) to finance projects that support the four key areas.
The specific budget allocations for each government ministry will be announced in turn during the two-week parliamentary session.