Minister insists on fuel price hike<\/p>\n
JAKARTA (JP): Finance Minister Prijadi Praptosuhardjo insisted
\non Monday that fuel prices must be increased by 20 percent in
\nApril to meet urgent budget needs, indirectly disputing a remark
\nmade earlier by Coordinating Minister for the Economy Rizal
\nRamli.<\/p>\n
\"Fuel prices must be increased by 20 percent or there will be
\ngrave consequences for the state budget,\" Prijadi told reporters
\non the sidelines of the inauguration ceremony for the new
\ndirector general of taxes Hadi Poernomo.<\/p>\n
\"I expect the House of Representatives to approve the plan,\"
\nhe added.<\/p>\n
Rizal had earlier commented that the government was undecided
\nover the fuel price hike plan.<\/p>\n
The Rp 41.3 trillion (US$4.3 billion) appropriation for fuel
\nsubsidies made in the current 2001 state budget had assumed that
\ndomestic fuel prices would be increased by 20 percent in April.<\/p>\n
Minister of Energy and Mineral Resources Purnomo Yusgiantoro
\nalso said last week that the government had not yet decided
\nwhether to raise fuel prices by 20 percent in April because the
\nplan had not yet been approved either by the Cabinet or the
\nlegislature.<\/p>\n
\"We have completed the proposal (for the price hike), but it
\nis not yet final. There are still other aspects to be
\nconsidered,\" he said.<\/p>\n
The opposing comments signal increasing differences among
\nsenior economics officials in the administration of the embattled
\nPresident Abdurrahman Wahid over major economic issues.<\/p>\n
The government had planned to cut fuel subsidies by raising
\nfuel prices by an average of 20 percent in April this year as
\npart of the overall strategy of eventually eliminating fuel
\nsubsidies by 2003.<\/p>\n
The plan is also part of an agreement reached with the
\nInternational Monetary Fund, which is providing a multibillion
\ndollar bailout package for the country.<\/p>\n
The gradual elimination of government fuel subsidies is also
\nin line with the coming into being of the Asian Free Trade Area
\nin 2003.<\/p>\n
But rises in fuel prices could trigger further social and
\npolitical unrest in a country already roiled by political feuding
\nbetween President Abdurrahman and the majority of factions in the
\nHouse.<\/p>\n
The government raised fuel prices by an average of 12 percent
\nin October last year. But, this had also been put back from the
\ninitial timetable which was set for April.<\/p>\n
The government had to provide some Rp 800 billion last year to
\nhelp minimize the financial burden of the fuel price hike on some
\n17.4 million disadvantaged families.<\/p>\n
A hike in fuel prices in 1998 contributed to the social and
\npolitical unrest that led to the downfall of the former
\nauthoritarian president Soeharto.<\/p>\n
Elsewhere, Prijadi reiterated that the next disbursement of
\nthe IMF US$400 million loan to the country would depend on the
\ndevelopments in the process of amending the central bank law.<\/p>\n
He said that the Fund was concerned that the proposed
\namendments would jeopardize the independent status of Bank
\nIndonesia.<\/p>\n
\"But the problem with the fiscal decentralization policy is
\nover,\" he said, pointing out that the central government had
\nbanned regional governments from incurring borrowings this year
\nas demanded by the Fund.<\/p>\n
The House is currently debating the government-proposed bill
\non the amendment of the central bank law.<\/p>\n
The legislature had initially planned to complete the
\ndeliberation process by the middle of this month, but a Bank
\nIndonesia official following the debates has expressed doubts
\nabout whether it could be completed as scheduled.<\/p>\n
\"There are too many amendments to be debated,\" the Bank
\nIndonesia official said.<\/p>\n
The IMF delayed in December the most recent (third) loan
\ndisbursement to Indonesia. The Fund promised in January last year
\nto provide a total of $5 billion in loans, and has so far
\ndisbursed around $1 billion.<\/p>\n
Separately, Dipo Alam, a senior official of the Coordinating
\nMinistry for the Economy, said on Monday that the government was
\nexpected to complete the review of the country's economic reform
\nprogram with the IMF later this month, paving the way for the
\ndisbursement of the next loan.<\/p>\n
\"Now, we only have to negotiate about the amendment of the
\ncentral bank law,\" said Dipo, who is in charge of coordinating
\nthe talks with the IMF review team.<\/p>\n
\"The issue of fiscal decentralization has already been
\nresolved,\" he added. (rei)<\/p>",
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