Govt confirms fuel price hike in 2005<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
After months of speculation, the new government confirmed on
\nThursday it would reduce the fuel subsidy for next year, making a
\nhike in domestic fuel prices in the near future inevitable.<\/p>\n
A government team is now studying a modified subsidy scheme to
\nreplace the current scheme, which is seen as benefiting the rich
\nmore than the poor, according to Coordinating Minister for the
\nEconomy Aburizal Bakrie.<\/p>\n
\"We are readying a subsidy formula that will be more pro-poor.
\nThe (fuel) subsidy will be reduced, but in return a direct
\nsubsidy will be given to certain sectors such as education,
\nhealth and others,\" Aburizal said.<\/p>\n
Aburizal said a \"shift\" in the fuel subsidy policy was
\nnecessary because the current subsidy failed to reach those who
\nneeded it most.<\/p>\n
\"Even I benefit from the existing subsidy because it makes
\nfuel prices cheap,\" he added.<\/p>\n
Aburizal did not provide details on the new scheme, including
\nwhether it meant the government would submit a revision of the
\n2005 state budget to the House of Representatives sooner than
\nscheduled.<\/p>\n
Under existing law, the government is allowed to submit a
\nrevision of the state budget to the House only in the second
\nsemester of the fiscal year.<\/p>\n
Aburizal did not mention by how much the government would be
\nwilling to reduce the subsidy.<\/p>\n
Yet, his remarks should end speculation over the issue, at
\nleast for a while.<\/p>\n
Debate over the fuel subsidy took off amid soaring global oil
\nprices, which have been hovering at levels well above those
\nanticipated in the state budget.<\/p>\n
This has meant that Indonesia has had to allocate more money
\nfor the fuel subsidy.<\/p>\n
After projecting the fuel subsidy at about Rp 14.5 trillion
\nfor this year, rising global oil prices boosted the subsidy to a
\nwhopping Rp 69.2 trillion -- just slightly less than the Rp 71.9
\ntrillion allocated for development spending.<\/p>\n
The subsidy has hugely burdened the already cash-strapped sate
\nbudget, putting pressure on the government to review the scheme.<\/p>\n
Also, the subsidy has encouraged fuel smuggling to neighboring
\ncountries.<\/p>\n
The World Bank, one of the country's major donors, was the
\nlatest to urge the government to cut the fuel subsidy, which it
\nsaid was draining away money the government could spend on
\npoverty alleviation.<\/p>\n
It said the existing subsidy scheme benefited the rich five
\ntimes more than it did the poor.<\/p>\n
Experts believe the impact of a domestic fuel price hike on
\ninflation would be manageable, with a 10 percent increase in fuel
\nprices expected to add about 0.6 percent in inflation.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-confirms-fuel-price-hike-in-2005-1447893297",
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"sponsor": "Okusi Associates",
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