By BERNAMA
Abdul Wahid Omar
Minister in the Prime Minister’s Department Abdul Wahid Omar said Budget 2016 will be reviewed if crude oil prices continue to stay low.
Budget 2016 was based on the assumption that the Brent Crude were to average at US$48 per barrel next year.
The crude oil global benchmark, Brent crude for February delivery declined 29 cents to US$37.10 at early session today.
“If indeed this is the new normal, proper adjustments will be made. My view is that I don’t think crude oil can be at such a low level for a prolong period. There will come a time it will rebound,” Abdul Wahid said.
Meanwhile, he said the ringgit is expected to remain stable at the average level of 4.20 against the US dollar next year amid US interest rate hike.
He said the US Federal Reserve’s (Fed) move had been long anticipated by the market and the 0.25-percentage-point hike was very much within the expectations of most analysts.
“I think what is equally important is the indication from the Fed that the subsequent interest rate hikes would be gradual.
“It is a path towards gradual interest rate normalisation and that would account to the development of the US economy,” he told reporters after delivering a talk on Economic Outlook: The Way Forward For Malaysia today.
The talk was organised by the Harvard Business School Alumni Club of Malaysia and Universiti Teknologi Malaysia’s International Business School.
The Fed on Wednesday raised interest rates by 0.25 percentage points, its first increase since 2006.
The move takes the range of rates banks offer to lend to each other overnight – the Federal Funds rate – to between 0.25% and 0.5%.
Asked on possible capital outflows following the US interest rate hike, Abdul Wahid said Malaysia’s economic fundamentals are strong with visible level of fiscal discipline and adequate reserves to deal with the situation.
“As we move forward, with the economy continues to grow, I think there are little reasons for people to make any unexpected moves. Having said that, we will always move forward and continue to embrace proactive policies,” he added.
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