Commission OKs proposed fuel price hike<\/p>\n
Urip Hudiono, The Jakarta Post, Jakarta<\/p>\n
Providing the government with much-needed support over its plan
\nto increase fuel prices, the House of Representatives Budget
\nCommission has approved a fuel subsidy allocation in such a way
\nthat makes the increase mandatory.<\/p>\n
At a hearing on the second and final revision of the 2005
\nstate budget on Tuesday, the commission decided to chose the
\nsecond option -- which earmarks the fuel subsidy at Rp 89.2
\ntrillion (US$8.75 billion) -- over the first one, which sets the
\nfigure at Rp 113.7 trillion.<\/p>\n
The two options were the remaining alternatives on the table
\nafter weeks of intensive debate.<\/p>\n
"The Budget Commission agreed on the second option, which
\nconsequently gives room to the government to increase fuel
\nprices," commission head Emir Moeis told the forum when reading
\nout the conclusion of the hearing.<\/p>\n
With the government having disbursed Rp 78 trillion
\nto subsidize fuel as of August, it will have no choice but to
\nraise fuel prices to keep the cost of the fuel subsidy in check
\nso that it does not exceed the full-year target of Rp 89.2
\ntrillion.<\/p>\n
The commission's decision must be approved by a House plenary
\nmeeting, scheduled for Sept. 27.<\/p>\n
It will be difficult for legislators to reject the
\ncommission's proposal, as under prevailing laws, a rejection
\nwould mean reverting back to the figure earmarked in the first
\nrevision of the 2005 state budget, which was Rp 76.3 trillion --
\neven lower than the money the government had disbursed as of
\nAugust to subsidize fuel.<\/p>\n
Minister of Finance Yusuf Anwar declined to specify the rate
\nof the increase, saying: "Calculations are underway, we'll see
\nhow they turn out.<\/p>\n
"The government is happy that the Budget Commission preferred
\nthe second option as we believe this will lend more credibility
\nto the government, as well as to the House. It shows that we are
\ncapable of straightening our fiscal fundamentals out."<\/p>\n
Previously, State Minister of National Development Planning
\nSri Mulyani Indrawati said that the fuel price increase would be
\nat least 50 percent.<\/p>\n
The commission also approved revisions to other key
\nassumptions.<\/p>\n
The country's economic growth remained set at 6 percent,
\nbetting on improving investment and export growth, which are
\nexpected to sustain its 13.6 percent and 10.2 percent growth,
\nrespectively, during the first semester, until the rest of the
\nyear.<\/p>\n
Inflation was set at 8.6 percent, higher than the government's
\n8 percent proposal, in part on estimated further inflationary
\npressure from high oil prices and a weak rupiah.<\/p>\n
The rupiah exchange rate was earmarked at Rp 9,800 per dollar,
\nhigher than the government's Rp 9,500 proposal, until the year's
\nend.<\/p>\n
The Commission also approved state revenues amounting to Rp
\n540 trillion or 20.4 percent of the GDP, higher than proposed Rp
\n516.2 trillion.<\/p>\n
The revenues include from tax Rp 352 trillion, from non-tax Rp
\n180.7 trillion.<\/p>",
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