Fuel subsidy spending to double: VP
Fuel subsidy spending to double: VP
The Jakarta Post, Jakarta
With world oil prices still regularly hitting record highs, the
government has admitted that its fuel subsidy expenditures will
likely double over and above its forecast allocation for this
fiscal year, and in the process doubling the state budget
deficit.
Vice President Jusuf Kalla announced on Friday that because
oil prices have surpassed US$66 a barrel, fuel subsidies could
reach up to Rp 150 trillion (US$15.3 billion) and push the budget
deficit up to nearly Rp 70 trillion.
The government had forecast the deficit to reach Rp 26.2
trillion, or 1 percent of Indonesia's gross domestic product
(GDP).
The government has only allocated Rp 76.5 trillion for fuel
subsidies -- based on a full-year consumption of 59.6 million
kiloliters, oil prices at $45 per barrel and a rupiah exchange
rate of Rp 9,300 a dollar.
"We can no longer live by burning money with such cheap
domestic fuel prices," Kalla said. "We just cannot afford it."
In light of this, the government is ever more determined to
reduce the fuel subsidy by increasing domestic fuel prices and
changing its current scheme to a direct subsidy for the poor.
Kalla explained that poverty eradication funds would be
disbursed to poor people every three months. The Central
Statistics Agency is expected to complete its registration of
those eligible to receive assistance funds under the scheme by
September.
He, however, refused to go into details on a possible fuel
price hike, stressing that it would depend on the global oil
prices and the rupiah exchange rate as well as the level of
subsidy spending to be agreed upon by both the government and the
House of Representatives.
"Those are the three main factors we will take into account,"
Kalla said.
To finance the possible rise in fuel subsidies and keep this
year's deficit at 1 percent of the GDP, Minister of Finance Jusuf
Anwar said the government has considered to use unspent
expenditure allocations from previous state budgets.
"We will propose this to the House next week," he said,
explaining how the government had previously used Rp 7.5 trillion
in 2003 and Rp 3 trillion last year of such funds after the
House's approval.
Jusuf is scheduled to have a hearing with the House's budget
commission on Monday on the first half budget report.
The finance ministry's Director General of the Treasury, Mulia
Nasution, estimated that the unspent allocations as of last year
was some Rp 21 trillion.
"We don't have the exact figure and if it is actually extra
funds that we can use. The government is still finalizing last
year's state budget report," he said.
Jusuf had previously said that the government would finance
the possible gap by boosting state revenues from taxes, customs
and excise, as well as from the profits and privatization
proceeds of state-owned enterprises.
Elsewhere, Coordinating Minister for the Economy Aburizal
Bakrie said the government would also continue its energy-saving
campaign to reduce fuel consumption, which at present is
estimated to reach 65 million kiloliters for the year.
"We will particularly encourage the rich to be more austere in
using energy," he said.
Aburizal further said the government would also continue
encouraging the use of alternative fuels -- particularly coal,
natural gas and biodiesel fuel.
"The current price of biodiesel at Rp 3,000 a liter plus
distribution costs is nearing feasibility for industrial
purposes," he said. "If fuel prices are no longer subsidized, it
could prove to be even more competitive by price."
The Jakarta Post, Jakarta
With world oil prices still regularly hitting record highs, the
government has admitted that its fuel subsidy expenditures will
likely double over and above its forecast allocation for this
fiscal year, and in the process doubling the state budget
deficit.
Vice President Jusuf Kalla announced on Friday that because
oil prices have surpassed US$66 a barrel, fuel subsidies could
reach up to Rp 150 trillion (US$15.3 billion) and push the budget
deficit up to nearly Rp 70 trillion.
The government had forecast the deficit to reach Rp 26.2
trillion, or 1 percent of Indonesia's gross domestic product
(GDP).
The government has only allocated Rp 76.5 trillion for fuel
subsidies -- based on a full-year consumption of 59.6 million
kiloliters, oil prices at $45 per barrel and a rupiah exchange
rate of Rp 9,300 a dollar.
"We can no longer live by burning money with such cheap
domestic fuel prices," Kalla said. "We just cannot afford it."
In light of this, the government is ever more determined to
reduce the fuel subsidy by increasing domestic fuel prices and
changing its current scheme to a direct subsidy for the poor.
Kalla explained that poverty eradication funds would be
disbursed to poor people every three months. The Central
Statistics Agency is expected to complete its registration of
those eligible to receive assistance funds under the scheme by
September.
He, however, refused to go into details on a possible fuel
price hike, stressing that it would depend on the global oil
prices and the rupiah exchange rate as well as the level of
subsidy spending to be agreed upon by both the government and the
House of Representatives.
"Those are the three main factors we will take into account,"
Kalla said.
To finance the possible rise in fuel subsidies and keep this
year's deficit at 1 percent of the GDP, Minister of Finance Jusuf
Anwar said the government has considered to use unspent
expenditure allocations from previous state budgets.
"We will propose this to the House next week," he said,
explaining how the government had previously used Rp 7.5 trillion
in 2003 and Rp 3 trillion last year of such funds after the
House's approval.
Jusuf is scheduled to have a hearing with the House's budget
commission on Monday on the first half budget report.
The finance ministry's Director General of the Treasury, Mulia
Nasution, estimated that the unspent allocations as of last year
was some Rp 21 trillion.
"We don't have the exact figure and if it is actually extra
funds that we can use. The government is still finalizing last
year's state budget report," he said.
Jusuf had previously said that the government would finance
the possible gap by boosting state revenues from taxes, customs
and excise, as well as from the profits and privatization
proceeds of state-owned enterprises.
Elsewhere, Coordinating Minister for the Economy Aburizal
Bakrie said the government would also continue its energy-saving
campaign to reduce fuel consumption, which at present is
estimated to reach 65 million kiloliters for the year.
"We will particularly encourage the rich to be more austere in
using energy," he said.
Aburizal further said the government would also continue
encouraging the use of alternative fuels -- particularly coal,
natural gas and biodiesel fuel.
"The current price of biodiesel at Rp 3,000 a liter plus
distribution costs is nearing feasibility for industrial
purposes," he said. "If fuel prices are no longer subsidized, it
could prove to be even more competitive by price."