Government will not raise fuel prices, Boediono says<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Minister of Finance Boediono indicated on Friday that the
\ngovernment would not increase domestic fuel prices despite the
\ncurrent sharp rise in the international price of oil.<\/p>\n
\"We will peg domestic fuel prices (at a certain level) so as
\nnot to jeopardize the economy and not place an additional burden
\non the public. But consequently, the (fuel) subsidy will have to
\nbe increased. That's what we have to prepare for,\" he told
\nreporters.<\/p>\n
Fears over a possible U.S.-led military strike on Iraq have
\nsent the price of oil climbing to above US$35 per barrel, much
\nhigher than the government's target of $22 per barrel under the
\n2003 state budget.<\/p>\n
This has led to speculation that fuel prices in the domestic
\nmarket will be raised to better reflect international prices.<\/p>\n
Separately, Vice President Hamzah Haz was quoted by Antara as
\nsaying on Friday that the government would not raise domestic
\nfuel prices unless the international oil price jumped to $50 per
\nbarrel.<\/p>\n
\"The government will try to maintain the (fuel) prices (at
\ncurrent levels). We have not yet considered raising them,\" he
\nsaid.<\/p>\n
The government was forced to cancel a fuel price hike earlier
\nthis year following widespread protests from various groups.<\/p>\n
Increasing fuel prices is a sensitive political issue in this
\ncountry as such a move triggers higher prices for other
\ncommodities and services, hurting both lower-income groups and
\nbusiness.<\/p>\n
But Boediono said that keeping domestic fuel prices low would
\nrequire a greater government subsidy.<\/p>\n
As set out in this year's state budget, the total allocation
\nfor fuel subsidies is earmarked at Rp 13.3 trillion (about $1.5
\nbillion).<\/p>\n
Boediono did not elaborate as to how much money would have to
\nbe allocated to cover the higher-than-expected subsidy spending,
\nsaying that the calculations had yet to be finalized.<\/p>\n
Boediono said he would make sure, however, that all the
\nnecessary calculations would have been completed by the time the
\ngovernment submitted its budget-implementation report to the
\nHouse of Representatives sometime in the middle of this year.<\/p>\n
According to the prevailing regulations, after the first
\nsemester of the fiscal year the government has to report to
\nlegislators on the implementation of the state budget and whether
\nany adjustments are needed to the basic budget assumptions --
\nincluding oil prices.<\/p>\n
\"Yes, there will be revisions, but we need to calculate them
\nfirst. They will all have been completed by the time we submit it
\n(the first semester report) to the House,\" he said.<\/p>\n
In contrast to the issue of higher fuel subsidies, the
\ngovernment is actually enjoying windfall profits from
\nskyrocketing international oil prices as the country is also an
\noil exporter.<\/p>\n
The country imports a certain amount of crude oil to produce
\nlocal fuel products.<\/p>\n
Boediono declined to say how much the expected windfall gains
\nfrom oil would amount to this year.<\/p>",
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