Low oil prices and the impact of the pandemic continue to weigh heavily on gov’t fiscal position
BANDAR SERI BEGAWAN – The Legislative Council (LegCo) has approved a government budget of $5.86 billion for the 2021/2022 financial year after 11 days of deliberation.
On Thursday, the supply bill was read for a third time and was passed without any amendments to the allocations for each government ministry.
The bill will come into effect at the start of the financial year on April 1.
The government’s fiscal position took a major hit after the onset of the COVID-19 pandemic sent oil prices crashing early last year.
As of February 28, government has collected just $1.46 billion revenue for the 2020/21 financial year, down 57 percent from the previous year.
Although oil prices have stabilised from a 25-year low in April 2020, the Ministry of Finance and Economy said Brunei’s current fiscal deficit stands at $2.98 billion, the largest in over a decade and nearly three times more than the previous year.
The ballooning deficit has forced government to cut development spending and continue with fiscal consolidation measures, as it draws on reserves to finance the deficit. This year’s development expenditure is listed as $600 million, down from $800 million last year.
The government has projected the deficit to widen to $3.25 billion in 2021/22 — a pessimistic forecast compared to other analyses which see the deficit narrowing — with revenue predicted to increase to $2.61 billion based on current oil prices.
Below we break down government spending by ministry. We list the FY 2021/22 allocation for each ministry, which we have calculated as operational budget plus development expenditure.