Malaysia slashes 2015 federal budget, cuts growth forecast as falling oil price hurts revenue

Malaysia cut its economic growth forecast for this year and announced austerity measures after tumbling oil prices forced the government to slash its budget.

Prime Minister Najib Razak says the 2015 budget, announced in October, was based on oil prices averaging $100 a barrel but this projection was no longer realistic as global crude prices have dropped by over 50 percent.

He says the government lowered its oil price forecast to $55 a barrel, which will lead to a revenue shortfall of 8.3 billion ringgit ($2.3 billion). Najib says the government will slash its operating expenditure by 5.5 billion ringgit ($1.5 billion).

He says Tuesday the economy is forecast to grow between 4.5 and 5.5 percent this year, down from an earlier estimate of 5-6 percent.