KUALA LUMPUR - The Government has a "contingency plan" ready to be implemented if crude oil price drops drastically.
Prime Minister Datuk Seri Najib Tun Razak said the contingency plan will be revealed if the global crude oil price dips below US$30 per barrel.
"The most sensitive indicator to government expenditure is the global crude oil price.
"If the price falls drastically, meaning lower than US$30 (S$42) per barrel on a consistent mode, we will face challenges.
"And that is when the government will implement a contingency plan that we have in place," he said in response to a question by Datuk Wan Mohammad Khair-il Anuar Wan Ahmad (BN - Kuala Kangsar) in the Dewan Rakyat.
However, Najib said it was unlikely that the contingency plan would take effect, saying that the current crude oil price seems to be rising.
"Today the price was at US$40 per barrel, which is good since we had estimated the price to be between US$30 and US$35 per barrel under the recalibrated Budget 2016.
"The Government will monitor the developments closely," he added.
On the recalibrated Budget, Najib assured lawmakers that it did not mean the Government was cutting back on the development of approved projects.
"It is more in terms of cash flow, redistributing the allocations for projects.
"We have released a guideline to optimise the cash flow, to manage resources effectively and organise projects by priority," he said, adding that proactive steps should be integrated to allow all approved projects to continue as planned.