A researcher from the Centre for Food, Energy, and Sustainable\nDevelopment at the Institute for Development of Economics and Finance\n(Indef), Afaqa Hudaya, has advised the government to consider a gradual\nfuel price adjustment scheme to mitigate pressures from surging global\ncrude oil prices.<\/p>\n
According to Hudaya, rising prices for global crude oil such as Brent\nCrude Oil have the potential to compel the government to increase fuel\nprices. However, such a policy could also trigger inflation spikes and\nsubstantial social impacts.<\/p>\n
\u201cA rise in fuel prices can indeed be one option when global crude oil\nprices increase, but such a policy also has the potential to cause\ninflation shocks and considerable social consequences,\u201d Hudaya said\nduring an online public discussion titled \u201cHoliday Economics in the\nMidst of War Turmoil\u201d held on Monday, 9 March.<\/p>\n
He explained that the government could implement a gradual price\nadjustment scheme, or gradual price adjustment, to prevent the public\nfrom experiencing shock due to excessively high price increases all at\nonce.<\/p>\n
\u201cRather than raising fuel prices all at once in a large range, price\nadjustments could be carried out gradually based on movements in global\noil prices,\u201d Hudaya said.<\/p>\n
Under this scheme, price adjustments could be made periodically with\nrelatively small values. If fiscal conditions necessitate, price\nincreases of approximately IDR 200 to IDR 300 per litre could be\nimplemented gradually.<\/p>\n
Additionally, the government could also carry out recomposition of\nstate spending to dampen pressure on the state budget. One option that\ncould be considered is budget reallocation from certain programmes such\nas the Free Nutritious Meals programme or projects deemed\nnon-priority.<\/p>\n
\u201cPressure on the state budget could be dampened through spending\nreallocation and programme efficiency so that the impact is not directly\nborne by the public through fuel price increases,\u201d he said.<\/p>\n
Hudaya also believes the government could postpone non-priority\nprojects, increase ministry and institutional spending efficiency, and\noptimise state revenue from the commodities sector to strengthen fiscal\nspace.<\/p>\n
These steps are considered important so that energy price adjustment\npolicies do not trigger social unrest in society. He cited examples from\nseveral regions such as Aceh where panic buying phenomena of fuel have\nalready begun to emerge amid concerns about price increases.<\/p>\n
\u201cSeveral alternative schemes such as gradual adjustment, spending\nreallocation, and budget efficiency could be options so that energy\npolicies do not cause shock effects for the public,\u201d Hudaya\nconcluded.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/fuel-price-rise-likely-indef-recommends-gradual-adjustment-scheme-to-prevent-inflation-1773046312", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }