BY NATASHA JEE & GABRIEL LIHAN
KUCHING: Deputy Premier Datuk Amar Douglas Uggah Embas has clarified that the annual State Budget, like any other government budget, is formulated based on certain key assumptions to derive at the estimated revenue and expenditure.
In response to Padungan assemblyman Chong Chieng Jen, who earlier raised the issue that there is a shortfall in the 2021 state’s revenue, Uggah said therefore, the actual performance of both revenue and expenditure may vary from the estimated budget figures.
“There are no so-called discrepancies in the figures as mentioned but merely variances which could be explained as follows.
“The actual revenue collected for 2021 was RM7.62bil lower than the estimated revenue mainly due to lower collection in State Sales Tax (SST) from oil and gas, royalty from oil and gas, dividend and interest income as a result of economic slowdown caused by Covid-19 pandemic,” said Uggah, who is also the Second Finance and New Economy Minister, in his winding-up speech at the Sarawak Legislative Assembly (DUN) sitting on Thursday (Dec 1).
He further explained the actual operating expenditure for 2021 increased to RM5.94bil from RM3.83bil was mainly due to substantial amount appropriated to State Disaster Relief Trust Fund to cater to expenditure related to various state government initiatives under the nine Bantuan Khas Sarawakku Sayang (BKSS) packages to mitigate the impacts of the pandemic.
“The actual development expenditure for 2021 was only RM5.3bil, lower than the estimated sum of RM6.3bil due to imposition of movement control order (MCO) beginning first half of 2021 that has affected the implementation of various projects and programmes throughout the state.”
Later in a press conference, Chong said: “Even though we have become friends, we in the august House, we have to fulfil our duty to ensure check and balance on the ruling government.”
“On the reply by Uggah on the shortfall of RM2.5bil in the revenue for 2021 which I raised in my debate on Friday where the government estimate of revenue was RM10bil, and when the government tabled the 2021 budget, it is RM10bil, and when we look at the 2023 State Budget which reports the actual revenue of the state government in 2021, is it only RM7bil.
“There is a shortfall of RM2.5bil between the estimated revenue of the state government and the actual revenue of the state government for 2021.
“So, that is why I raised that issue because it is a huge variance, a huge drop between the actual and estimate and for any prudent or the financial budgeting and that is something we should be worried about and that is something and the Treasury and the state government should look into,” he added.
In a separate press statement, Chong said the government’s royalties and sales tax on crude oil and petroleum products depended directly on the international crude oil prices.
“Logically, such a huge shortfall would entail that the international crude oil prices have fallen below expectation, thus resulting in less-than-estimated collection of royalties and sales tax.
“However, if we look at the historical international crude oil prices for 2021, that is not the case. In fact, the international crude oil prices have gone up tremendously for 2021 compared to 2020.
“The average crude oil price for 2020 was only USD39.68 per barrel while the average crude oil price for 2021 was USD68.17 per barrel. At the start of 2021, the crude oil price was only USD47.62. By the end of 2021, crude oil price has gone up to USD75.21 per barrel.”
Therefore, he said, against this general upward trend of crude oil prices, it was illogical that the royalties and sales tax actually collected by the government fall so much short of the estimated figure, unless the estimates were an unrealistic estimate.
“It is thus incumbent upon Uggah as the Second Minister of Finance to provide a better and more detailed explanation for the RM2.5bil shortfall in revenue from the estimated figure.”