Susilo's budget revision plan hailed<\/p>\n
Rendi A. Witular, Jakarta<\/p>\n
Experts agree on the plan by president-elect Susilo Bambang
\nYudhoyono to revise the 2005 state budget, citing the urgency to
\nrevise the crucial oil price assumption to better reflect current
\ndevelopments in global oil prices.<\/p>\n
Adjustments to the oil price are needed for the next
\ngovernment to ensure a more accurate benchmark to set other key
\nassumptions in the state budget; chief among these is the fuel
\nsubsidy, as well as revenue from oil and gas and revenue-sharing
\nbetween central and local governments.<\/p>\n
\"The current economic situation has changed quite fast, so the
\nrevision (of 2005 state budget) is needed.<\/p>\n
\"I think the most important assumption to be immediately
\nrevised is the price of oil,\" Minister of Finance Boediono told
\nreporters on Sunday.<\/p>\n
Boediono was commenting on Susilo's victory speech on
\nSaturday, in which he spelled out an immediate need for his
\nadministration to revise the 2005 state budget during his first
\nmonths in office.<\/p>\n
Boediono said that the 2005 state budget was not made to
\ncommit the new government to it, but was more as a legal backup
\nto ensure the availability and sustainability of the state's
\nfinances during governmental transition.<\/p>\n
In the first 2005 state budget draft, the oil price was set at
\nan annual average of US$24 per barrel. Based on that, revenue
\nfrom oil and gas would be fixed at Rp 47.1 trillion ($5.23
\nbillion) and revenue sharing for regional governments at Rp 31.2
\ntrillion.<\/p>\n
The oil price assumption is especially crucial in the
\ncalculation of the oil subsidy for next year, which is earmarked
\nat Rp 19 trillion.<\/p>\n
Mandiri Securities head of research Kahlil Rowter also agreed
\nthat the upcoming administration needed to revise next year's
\nstate budget, primarily the oil price assumption, as $24 per
\nbarrel was unrealistic. The world oil price closed at over $50 on
\nFriday.<\/p>\n
Kahlil said that a realistic oil price assumption would help
\nthe government to cut fuel subsidies at a more precise level, and
\nto accurately assume the state budget deficit level, which was
\nearmarked at Rp 16.8 trillion.<\/p>\n
\"Crude prices have been averaging more than $40 a barrel at
\npresent and are projected to remain at that level next year. The
\nmost reasonable oil price would be at around $35 a barrel,\" said
\nKahlil.<\/p>\n
\"Changes in the assumption will eventually cause overall
\nchanges for state revenues and expenditures,\" he said.<\/p>\n
For every dollar that the world oil price is above the
\nassumption, the impact will be between Rp 100 billion to Rp 150
\nbillion in extra expenditure requirements, according to the
\nMinistry of Finance.<\/p>\n
Rocketing oil prices mean that the government has to allocate
\nmore of the state budget for fuel subsidies. Even based on an oil
\nprice assumption of $36 in the 2004 state budget, fuel subsidies
\nwere budgeted at Rp 59.2 trillion, four times higher than the Rp
\n14.5 trillion projected in the 2005 draft earlier this year.<\/p>\n
The central government pays for all of the fuel subsidies,
\nwhile oil and gas revenues must be shared with regional
\nadministrations.<\/p>\n
Kahlil, however, was concerned with a possible lingering
\nprocess for the budget revision, as Susilo could choose a whole
\nnew group of people for his economic team. In addition, most
\nmembers of the House of Representatives' budget commission were
\nnew to the process.<\/p>\n
\"I fear that the revision will take a long time, because they
\nhave to start again from scratch. The revision should be
\nconcluded before January, since the state budget should be fully
\nimplemented next year,\" said Kahlil, adding that a delay in
\nfinishing the revision would cause uncertainties for the business
\ncommunity. Editorial -- Page 6<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/susilos-budget-revision-plan-hailed-1447893297",
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