CERTAIN parts of Budget 2021 can be used in case the budget fails to get majority support from MPs during the voting stage at the Dewan Rakyat on Nov 26 (Thursday).
This consists of “charged expenditure”, which is essentially pensions and debt servicing that only makes up 20% of the overall budget, according to Finance Minister Tengku Datuk Seri Zafrul Tengku Aziz.
“The remaining 80% – including operations of public services like healthcare, education, law & order – must be approved by the Parliament,” wrote Maybank IB Research chief economist Suhaii Ilias.
Suhaii and his team made the statement in a research note entitled “Post-Budget 2021 Dialogue with Finance Minister”.
Tengku Zafrul noted the use of Section 102(a) of the Federal Constitution to pass a partial budget is allowed when there is insufficient time to approve a budget, before the beginning of the new financial year.
Such an incident happened in 1999, when the Parliament was dissolved shortly after the tabling of Budget 2000.
At the time, a special Dewan Rakyat session before the end of 1999 was called, after the general election, to approve a partial budget for year 2000.
“However, there is no precedent to approve a partial budget after the rejection of a budget,” he pointed out.
“Therefore, in the event Budget 2021 is not passed by the Parliament, a revised or new Budget 2021 needs be tabled and approved before end of this year to avoid delay into next year”.
Touching on the issue of the sustainability of Petronas dividend, in view of the special dividend last year and the extra dividend this year, Tengku Zafrul said the dividend ratio is based on the national oil corporation’s performance and its funding need for operation, obligation and capex.
“Petroleum-related revenue is projected to be at 16% of total revenue in 2021, down from 22% in 2020 and 32% in 2019,” he said.
“The forecast of lower Petronas dividend in 2021 of RM18 bil vs RM34 bil in 2020 acknowledges the adverse impact of COVID-19 on the oil & gas industry and on Petronas.”
Moving forward, the Government will continue with efforts to diversify revenues away from the oil & gas sector, added Tengku Zafrul.- Nov 23, 2020.
