Govt bows to pressure, revises assumptions<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
In response to a chorus of criticism over the assumptions in its
\n2006 draft budget, the government has proposed revisions to most
\nof its basic assumptions, including the much-cited oil price
\nforecast.<\/p>\n
During a hearing with lawmakers on Monday, Minister of Finance
\nJusuf Anwar proposed that the Indonesian Crude Price (ICP) in the
\nbudget be revised to between US$50 and $55 per barrel, from an
\ninitial assumption of $40 per barrel.<\/p>\n
With global oil prices showing no signs of abating, the
\nproposal is seen as a response to earlier rebukes over the
\ngovernment's overly cautious approach in determining key aspects
\nof the budget.<\/p>\n
"Because of the less conducive development of the
\nmacroeconomics condition lately, especially the spike in oil
\nprices and the U.S. dollar, the government is proposing new
\nassumptions for the 2006 budget," Jusuf was quoted as saying by
\nDow Jones.<\/p>\n
On Monday, New York's main oil contract, light sweet crude for
\ndelivery in October, climbed US$1.20 to $64.20 per barrel in
\nelectronic trading. In London, the price of Brent North Sea crude
\nfor November delivery rose $1.16 to $62.97 per barrel.<\/p>\n
Other proposed revisions include the rupiah's exchange rate
\nagainst the dollar.<\/p>\n
The rupiah will likely average between 9,500 and 10,000
\nagainst the greenback next year, Jusuf told House of
\nRepresentatives' Commission XI for financial affairs.<\/p>\n
The government originally set the exchange rate at Rp 9,400
\nper U.S. dollar.<\/p>\n
It also projected a slightly more cautious gross domestic
\nproduct growth target of 6 percent to 6.2 percent in 2006, from
\nthe earlier assumption of 6.2 percent.<\/p>\n
The inflation projection for next year was revised upward to
\nbetween 7 percent and 8 percent from 7 percent, while the oil
\noutput target was maintained at 1.075 million barrels a day.<\/p>\n
The government's 2006 budget assumptions, submitted to the
\nHouse in mid-August, immediately met with a whirlwind of
\ncriticism from analysts and legislators.<\/p>\n
Minister of Energy and Mineral Resources Purnomo Yusgiantoro
\nsaid at the time that the ICP would stand at between $40 and $45
\nper barrel, with international oil prices expected to decline by
\nup to $15 a barrel in 2006 due to a slowdown in the global
\neconomy and an easing of fears of political unrest in oil-
\nproducing countries.<\/p>\n
The ICP reflects the prices of various types of oil produced
\nin Indonesia and is used to determine local administrations'
\nshare of oil revenue.<\/p>\n
To meet domestic fuel demand, Indonesia has to import some
\n400,000 barrels of crude and 300,000 barrels of refined fuel
\nproducts per day. These imports use global market prices as their
\nbenchmarks.<\/p>\n
Continuing pressure from global oil prices and concerns that
\nthe budget cannot afford the ballooning fuel subsidy sent the
\nrupiah to a low of Rp 11,800 against the dollar last month.<\/p>\n
After the central bank raised its benchmark rate to 10 percent
\nfrom 8.75 percent, the rupiah has rebounded to about 10,000 per
\ndollar.<\/p>\n
The House and government will continue the deliberation of the
\n2006 state budget over the coming months.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-bows-to-pressure-revises-assumptions-1447893297",
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"sponsor": "Okusi Associates",
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