This year's state budget deficit is likely to soar far above
\ninitial forecasts unless immediate measures are taken to contain
\nsurging spending on fuel subsidies amid high global oil prices
\nand soaring fuel consumption at home, the Minister of Finance
\nsays.<\/p>\n
Jusuf Anwar estimated on Monday the deficit could jump to 1.3
\npercent of the gross domestic product (GDP), or about Rp 35.2
\ntrillion (US$36.2 billion), from projections of 0.8 percent of
\nGDP, or Rp 20.3 trillion,<\/p>\n
\"The government's cashflow is still manageable, but it will be
\nhard in the future to maintain it following the soaring cost of
\nthe fuel subsidy,\" Jusuf said after meeting President Susilo
\nBambang Yudhoyono.<\/p>\n
According to Jusuf, the 1.3 percent deficit was calculated
\nbased on the assumption that global oil prices stood at US$60 a
\nbarrel throughout the year, oil output stayed less than 1.125
\nmillion barrels a day, and domestic fuel consumption remained
\nhigh at 59.6 million kiloliters.<\/p>\n
With these assumptions, the Ministry of Finance estimates that
\nthe costs of the fuel subsidies would rise to Rp 123 trillion for
\nthe year.<\/p>\n
The 2005 state budget has allocated only Rp 76.5 trillion for
\nthe subsidies, assuming an average annual oil price of US$45 a
\nbarrel, a rupiah-U.S. dollar exchange rate of Rp 9,300 and fuel
\nconsumption at 59.6 million kiloliters.<\/p>\n
The government is scheduled to submit its second state budget
\nrevision to the House of Representatives in late August, with the
\nmain agenda likely to be seeking additional funds for fuel
\nsubsidy spending.<\/p>\n
Analysts say by carrying the cost of the subsidy the
\ngovernment is putting at risk the country's fiscal stability and
\nthe economy as a whole.<\/p>\n
They fear that the country's currently stable macro-economy
\nwill be severely impacted by the widening deficit, which will
\nreduce the government's ability to provide funds for social and
\neconomic emergencies and to service its massive debts to foreign
\ncreditors.<\/p>\n
A widening deficit also puts confidence in the country's
\neconomy at risk, jeopardizing the already slumping rupiah and
\ntriggering inflationary pressure and higher interest rates -- all
\nthings that can put the brakes on economic growth.<\/p>\n
Jusuf said the Ministry of Finance and several economic
\nanalysts were currently working to find effective ways to ease
\nthe deficit problem, including a further review of the fuel
\nsubsidy system.<\/p>\n
He however, refused to confirm whether the review would
\ninclude a cut in subsidies, as demanded by several economists and
\nbusiness lobby groups.<\/p>\n
\"I cannot disclose what kind of measures will be taken; they
\nare still being discussed. But we will certainly review the
\nallocation system for the fuel subsidy... I guess you can deduce
\nwhat I mean buy that,\" he said.<\/p>\n
The government launched a public energy conservation campaign
\nlast week, which many have criticized as ineffective. Instead,
\nits critics say, the government should reconsider its fuel
\nsubsidy policy and hike fuel prices again.<\/p>\n
According to the finance ministry, the government has already
\nspent some Rp 46 trillion on fuel subsidy payments to state oil
\nand gas company PT Pertamina -- more than half of its full-year
\nallocation.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/this-years-state-budget-deficit-is-likely-to-soar-far-above-1447899208",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}