House approves budget with $8b in fuel subsidies<\/p>\n
Urip Hudiono, The Jakarta Post, Jakarta<\/p>\n
The House of Representatives finally approved the government's
\nrevision of the 2005 state budget on Tuesday after three months
\nof deliberation that nearly clouded the country's first semester
\nfinancial position.<\/p>\n
The House's green light allows the government to immediately
\ndisburse the much needed Rp 11 trillion (US$1.14 billion)
\nassistance fund for low-income families, a Rp 13.3 trillion fund
\nfor rebuilding tsunami-stricken Nanggroe Aceh Darussalam and Nias
\nand Rp 76.5 trillion for the fuel subsidy.<\/p>\n
However, global oil prices which touched a record high of
\nUS$60 a barrel on Monday could take the revision back to square
\none, as fuel subsidies may likely balloon again, exceeding the
\nagreed allocation.<\/p>\n
In a plenary session on Tuesday, the House's 11 factions
\napproved the budget revision, even though several notes were
\nattached for the government to address.<\/p>\n
With less than 100 House members, of a total of 550, attending
\nthe plenary session, Tuesday's event served as a mere
\n"ceremonial" approval. The House's Budget Commission, tasked to
\ndeliberate the revision, had officially given its approval last
\nweek.<\/p>\n
The House had been using the deliberation of the budget
\nrevision, submitted on March 23, to strictly monitor the
\nimplementation of the government's decision to raise domestic
\nfuel prices by an average of 29 percent starting March 1.<\/p>\n
The fuel price hike was meant to ease fuel subsidies -- which
\nhad risen in line with soaring global oil prices -- to relieve
\nthe burden on the state budget, and to allocate a fund for the
\npoor. The government also proposed additional funds to rebuild
\nAceh and Nias, and address changes in the budget's macroeconomic
\nassumptions accordingly.<\/p>\n
Economic growth was forecast to reach 6 percent, the rupiah
\nexchange rate set at 9,300 per U.S. dollar, the inflation rate at
\n7.5 percent and the price of oil at $45 a barrel.<\/p>\n
Indonesia's oil production and the central bank's benchmark
\ninterest rate, meanwhile, were unchanged at 1.125 million barrels
\nper day and 8 percent, respectively.<\/p>\n
One of the issues in the budget revision highlighted by the
\nHouse was the possibility that fuel subsidies would keep going up
\ndue to steadily rising global oil prices and a weak rupiah, both
\naffecting the country's oil import costs.<\/p>\n
Chairman of the Budget Commission Emir Moeis said on the
\nsidelines of the plenary session that the fuel subsidy for the
\nyear would likely exceed its agreed allocation.<\/p>\n
"I assume the fuel subsidy could reach up to Rp 90 trillion by
\nthe end of the year, particularly if we consider several
\nforecasts saying global oil prices could reach $100 a barrel by
\n2008," he said.<\/p>\n
The probability of a higher subsidy is imminent, Emir added,
\nas out of the Rp 76 trillion fuel subsidy, Rp 32 trillion has
\nbeen used up for oil imports.<\/p>\n
With Idul Fitri, Christmas and New Year holidays at the end of
\nthe year, domestic fuel consumption is likely to be higher in the
\nsecond semester.<\/p>\n
To overcome such a problem, Emir urged the government to raise
\nthe country's oil production and be more transparent in the fuel
\nsubsidy disbursement, including in auditing fuel production costs
\nof state oil and gas firm PT Pertamina.<\/p>\n
He explained that the government could save up to Rp 29
\ntrillion if it increases Pertamina's efficiency in providing n
\nannual fuel consumption of 59 million kiloliters.<\/p>\n
Minister of Finance Jusuf Anwar said the approved revision
\nwould not be final, adding "The budget can be revised again in
\nthe second semester when the government submits its first
\nsemester budget realization report."<\/p>\n
He further said the government was still upbeat that the
\nsoaring global oil prices would have little effect on Indonesia's
\neconomic growth.<\/p>\n
"I still see it as being able to reach 6 percent by the end of
\nthe year," he said. "We have to be optimistic about it."<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/house-approves-budget-with-8b-in-fuel-subsidies-1447893297",
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