House questions big fuel subsidies in budget review<\/p>\n
JAKARTA (JP): High international oil prices forced the
\ngovernment to spend Rp 358.54 billion (US$151.5 million)
\nsubsidizing domestic fuel in the first six months of the
\n1996\/1997 fiscal year.<\/p>\n
At a hearing with Minister of Finance Mar'ie Muhammad
\nyesterday, the House of Representatives' Budgetary Commission
\nquestioned why the subsidy was not budgeted for earlier.<\/p>\n
Mar'ie said the government was compelled to subsidize domestic
\nfuel after the country's crude oil prices rose to an average
\nUS$19.15 a barrel on world markets in the March-August period,
\nfar exceeding the government's projection of $16.5 a barrel.<\/p>\n
\"The fuel subsidy is not the government's desire... it
\nhappened outside the government's control,\" Mar'ie said.<\/p>\n
The hearing, which is scheduled to run until Friday, is
\ndeliberating the 1997\/1998 budget and reviewing budgetary reports
\non the first six months of this fiscal year.<\/p>\n
Mar'ie said fuel was subsidized because the Rp 8.44 trillion
\nfrom domestic sales in the first semester -- below the
\ngovernment's target of Rp 8.57 trillion -- was not enough to
\ncover fuel production and distribution costs, which reached Rp
\n8.79 trillion.<\/p>\n
Indonesia imports crude oil from the Middle East to feed most
\nof its refineries.<\/p>\n
Marie said: \"It is not the government's intention to change
\nthe budget law without the consent of the House. The government
\nwas compelled to do so because of the international oil market
\nand domestic fuel market mechanism.\"<\/p>\n
He said one way to eliminate the subsidy was to increase
\ndomestic fuel prices, but the government did not do this because
\nit would have created \"economic uproars\".<\/p>\n
The government actually benefits from international oil price
\nrises because every $1 increase per barrel contributes Rp 630.7
\nbillion to its revenue from crude oil exports.<\/p>\n
The finance minister reported that for the April-September
\nperiod the government's export revenue from oil and gas reached
\nRp 8.37 trillion, exceeding its original target of Rp 7.08
\ntrillion.<\/p>\n
If the country's crude oil prices remain steady
\ninternationally until March next year, the government projects it
\nwill rake in Rp 9.2 trillion from gas and oil in the second half
\nof this fiscal year.<\/p>\n
Mar'ie reported the government earned Rp 24.39 trillion from
\ntaxes in the first half of this fiscal year, or 43.6 percent of
\nits full year target of Rp 55.99 trillion.<\/p>\n
It made Rp 8.71 trillion from value-added taxes in the first
\nhalf, or 40 percent of its total target of Rp 21.79 trillion.<\/p>\n
Mar'ie said tax revenues were below target because of the
\nintroduction of tax exemptions on several goods and services,
\nincluding cars, shipping agents and port services.<\/p>\n
\"It is expected that during the second semester of the
\n1996\/1997 fiscal year, revenues from value-added taxes will
\nincrease faster in line with increasing economic activities for
\nChristmas, New Year and Idul Fitri,\" Mar'ie said.<\/p>\n
Revenues from export taxes were well below target, reaching
\nonly 22.7 percent of the full year target of Rp 160.1 billion.
\nThis poor result was attributed to decreasing crude palm oil
\nprices internationally and to reduced export tax rates on some
\ncommodities.<\/p>\n
On expenditure, the government's routine spending in the first
\nsemester reached Rp 26.34 trillion, or 46.9 percent of its full
\nyear budget of Rp 56.11 trillion.<\/p>\n
Development expenditure in the first semester was Rp 11.78
\ntrillion, or 34.2 percent of the full year budget of Rp 34.5
\ntrillion. Rp 4.32 trillion of the first semester's development
\nexpenditure was financed by foreign aid. (rid)<\/p>\n
BoP -- Page 10<\/p>\n
Oil prices -- Page 12<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/house-questions-big-fuel-subsidies-in-budget-review-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }