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Bandar Seri Begawan - Brunei Darussalam's economic growth is forecast to reach 2.6 per cent this year and the country's revenue this year is expected to be B$6,287,940,000 ($6.28 billion), 87 per cent of which will come from oil and gas and another 12.2 per cent from the non oil and gas sector. The estimated expenditure this year (including development fund) is $5,900,000,000 ($5.9 billion).

The Minister of Finance II at the Prime Minister's Office, YB Pehin Orang Kaya Laila Setia Dato Seri Setia Awg Hj Abdul Rahman bin Hj Ibrahim said this during the presentation of a bill seeking to supply a sum out of the consolidated fund for the service of the financial year 2012/2013 and to appropriate the sum for certain purposes on the fifth day of the Eighth Legislative Council meeting yesterday.

The minister said the country's economy has achieved a strong growth last year. The country's economy from January-September 2011 expanded by 2.5 per cent year-on-year. In the same period, the country's export value also rose 27.3 per cent year-on-year. Inflation was also moderate at two per cent. Hence, the economic growth last year expanded at the rate of 2.1 per cent and the non oil and gas sector rose 2.5 per cent.

This year, the global economic prospect is challenging. Growth is expected to slow and unbalanced. In January 2012, the International Monetary Fund (IMF) has revised for the second time the global economic growth to 3.3 per cent compared to early forecast of four per cent in September 2011.

The global trade is also expected to decrease to 3.8 per cent compared to early forecast of 5.8 per cent, following domestic economic problems in the US, debt crisis in eurozone, which is feared to have a contagion effect on other economies, and global inflation which is expected to be at 6.2 per cent for developing and emerging economies compared to the early forecast of 5.9 per cent.

Although the economic prospect is challenging, the Department of Economic Planning and Development (JPKE) has forecasted the domestic economy to be strengthened with the rise in consumption as well as government and private sector investment. Hence the country's economic growth for this year is forecasted to be 2.6 per cent.

The rise in oil and gas price globally in 2011 had a positive impact on the country's revenue. However, the surge in prices was also followed by the increase in the production cost for the materials. Besides, the country also faced with challenges of low production due to mature fields and depreciation of US dollar compared to the Brunei dollar.

Taking into account the global and domestic economy and revenue collection for the financial year 2011/2012 as well as the government forecast for oil and gas sector, the Ministry of Finance has expected the estimated revenue for 2012/2013 financial year to be $6,287,940,000.

This includes the estimated revenue from oil and gas sector totalling $5,521.0 million (about 87.8 per cent) and $766.94 million (12.2 percent) from non oil and gas sector. The figure shows an increase of $389 million compared to the financial year 2011/2012.

"We thank for the blessings from Allah the Almighty and under the wise leadership of His Majesty the Sultan and Yang Di-Pertuan of Brunei Darussalam, the nation continues to enjoy peace and prosperity. The people enjoy high lifestyle and the government is able to implement developmental projects, provide basic services and facilities.

"But we should be alert and ready to face any unforeseen challenges such as decline in global economic growth, emergence of pandemic diseases or disasters, which could affect the economic stability and prosperity of the country.

"Hence efforts to strengthen the country's finance so that it continues to be stable and sustainable will be prioritised. Through prudent measures in the country's expenditure and financial management, in general, with the consent of Allah the Almighty, the government has been able to finance the expenditure beyond expectation.

"The government expenditure rose from year-to-year. Hence it is appropriate to continue with the efforts to control the expenditure from continuing to rise, taking into account the government revenues which heavily rely on oil and gas sector. The revenue from this sector is difficult to forecast as it depends on outside factors which are beyond the government 'control.

"Among the factors are the level of production of oil and gas, global oil cost and demand, cost of exploration and production of oil and gas as well as exchange rate of the US dollar.

"And to reduce such reliance, efforts to diversify the economic activities would continue to be intensified and made effective. These efforts should be intensified to develop a non oil and gas sector, with an aspiration for this alternative revenue to progressively offset revenue from oil and gas. At the same time, the government would continue to control the level of spending to achieve fiscal sustainability, consolidation and continuity of the country's financial resources in the long term," the minister said.

"With rapid globalisation, business competition and global trade are also great. The competition requires human resource capability that is competitive and sustainable. Countries that have competitive and sustainable human resource could tackle socio-economic issue such as unemployment, poverty and so on. Human resource is also a crucial aspect in widening and expanding economic resources, especially for a country that has limited domestic market like us.

"Hence, plans and appropriate efforts would continue to be intensified in upgrading the human resource capability in this country.

"By taking into account these factors, the budget proposal for 2012/2013 financial year has been reviewed based on the theme 'capacity development to generate inclusive and sustainable growth'.

"The theme is aimed to stress on the budget and enhancing efforts towards achieving the country's development that is inclusive in socio-economic aspect by taking into account fiscal sustainability in the long term.

"It could also generate and support efforts to involve every level of society, to be more capable and contribute to nation building.

"Based on these factors, the estimated expenditure for 2012/2013 financial year including allocation for development fund is proposed at $5,900,000,000.

"The amount is up by $100 million compared to 2011/2012 financial year. The additional fund is hoped to enhance quality and effectiveness of government services in supporting efforts to develop the country's economy," YB Pehin Dato Seri Setia Awg Hj Abdul Rahman said.

The efforts include facilitating business activities and investment, to generate conducive investment environment including enhancing the growth of SMEs as well as to step up attractiveness for multinational companies to invest and attract foreign direct investment effectively.

These efforts aspirated for the country's economic diversification programme through non oil and gas sector could be driven by the private sector, besides opening up more quality job opportunities for the locals, said the minister.

"In line with the budget theme this year, focus should be given to efforts to enhance the level of education, human resource capacity and research, consolidation of the private sector in stimulating the economy, enhancing efficiency, upgrading public welfare and continuous efforts to eradicate poverty."

The minister also said that the budget policy emphasises on fiscal consolidation through prudent spending and becomes the basis in making recommendations of the budget. Through this, the country's finance would be strengthened. The control in the level of expenditure is crucial for the country's reserve to be strong.

He also emphasised on the ability to provide one's own finance without debt is crucial and should be given priority for the nation to face any uncertainties and challenges such as global economic uncertainties, disaster, diseases and unexpected events.

--Courtesy of Borneo Bulletin