Commission OKs proposed fuel price hike
Commission OKs proposed fuel price hike
Urip Hudiono, The Jakarta Post, Jakarta
Providing the government with much-needed support over its plan
to increase fuel prices, the House of Representatives Budget
Commission has approved a fuel subsidy allocation in such a way
that makes the increase mandatory.
At a hearing on the second and final revision of the 2005
state budget on Tuesday, the commission decided to chose the
second option -- which earmarks the fuel subsidy at Rp 89.2
trillion (US$8.75 billion) -- over the first one, which sets the
figure at Rp 113.7 trillion.
The two options were the remaining alternatives on the table
after weeks of intensive debate.
"The Budget Commission agreed on the second option, which
consequently gives room to the government to increase fuel
prices," commission head Emir Moeis told the forum when reading
out the conclusion of the hearing.
With the government having disbursed Rp 78 trillion
to subsidize fuel as of August, it will have no choice but to
raise fuel prices to keep the cost of the fuel subsidy in check
so that it does not exceed the full-year target of Rp 89.2
trillion.
The commission's decision must be approved by a House plenary
meeting, scheduled for Sept. 27.
It will be difficult for legislators to reject the
commission's proposal, as under prevailing laws, a rejection
would mean reverting back to the figure earmarked in the first
revision of the 2005 state budget, which was Rp 76.3 trillion --
even lower than the money the government had disbursed as of
August to subsidize fuel.
Minister of Finance Yusuf Anwar declined to specify the rate
of the increase, saying: "Calculations are underway, we'll see
how they turn out.
"The government is happy that the Budget Commission preferred
the second option as we believe this will lend more credibility
to the government, as well as to the House. It shows that we are
capable of straightening our fiscal fundamentals out."
Previously, State Minister of National Development Planning
Sri Mulyani Indrawati said that the fuel price increase would be
at least 50 percent.
The commission also approved revisions to other key
assumptions.
The country's economic growth remained set at 6 percent,
betting on improving investment and export growth, which are
expected to sustain its 13.6 percent and 10.2 percent growth,
respectively, during the first semester, until the rest of the
year.
Inflation was set at 8.6 percent, higher than the government's
8 percent proposal, in part on estimated further inflationary
pressure from high oil prices and a weak rupiah.
The rupiah exchange rate was earmarked at Rp 9,800 per dollar,
higher than the government's Rp 9,500 proposal, until the year's
end.
The Commission also approved state revenues amounting to Rp
540 trillion or 20.4 percent of the GDP, higher than proposed Rp
516.2 trillion.
The revenues include from tax Rp 352 trillion, from non-tax Rp
180.7 trillion.