Government to keep oil price at $16.5 a barrel

Government to keep oil price at $16.5 a barrel

JAKARTA (JP): The government is likely to maintain the estimated average oil price of US$16.5 per barrel during the 1995-1996 fiscal year as the basis for estimating oil and gas tax receipts for the coming year.

"It is very difficult to predict international oil price developments. Although the oil prices strengthened during the first semester, there is a tendency that the prices will decrease," said Minister of Finance Mar'ie Muhammad in a hearing with the budgetary commission of the House of Representatives.

The four-day hearing, which started on Monday, will be discussing the first semester implementation of the current state budget and projections and assumptions for planning the 1996-1997 budget.

The minister said the state-owned oil company Pertamina has suggested that the government set the oil price at a conservative level of between $16 and $16.50 per barrel.

During the current fiscal year, the oil revenues are expected to be slightly higher than planned because the actual average oil price during the first semester of this fiscal year -- beginning in April -- was $17.16 per barrel.

In the Sixth Five Year Development Plan, government revenues from oil and gas are estimated at Rp 14.29 trillion for fiscal 1996-1997, of which Rp 10.42 trillion is expected from oil and Rp 3.87 trillion from gas.

He said that in estimating the oil production, the government will always consider the production capacity of Pertamina and its contractors, as well as the production quota set by the Organization of Petroleum Exporting Countries (OPEC), of which Indonesia is a member.

"The actual oil and gas condensate production in the first semester reached 1.61 million barrels a day, higher than the estimate of 1.53 million barrels, so we'll continue to be careful in projecting oil production for the next fiscal year," he said.

Oil and condensate production was estimated at 1.52 million barrels per day for the current fiscal year, but the actual production could be smaller due to a downward tendency shown during the first semester of this year, he added.

Deficit

In replying to questions about efforts to curb the current account deficit, which has tended to increase sharply this year, Mar'ie said the government plans to step up export promotion and curb the growth of imports, particularly of consumer goods.

He acknowledged that imports grew by 30.69 percent during the January-June period, much higher than the export growth of only 14.12 percent.

Mar'ie said the bulk of imports consisted of capital goods and basic and intermediate materials for domestic industries which could not be cut down.

But he acknowledged that the imports of consumer goods increased by more than 100 percent in the first semester due largely to the sharp rise in rice and sugar imports.

He added that the government will also provide incentives for investors with a view to increasing exports. One of the incentives will be allowing local companies to use chartered foreign ships to carry exports.

Mar'ie said the government also would step up anti-inflation efforts to curb the general price increases.

During the first seven months (April-October) of fiscal 1995- 1996 the inflation rate reached 4.39 percent, lower than the 4.56 percent in the same period of last fiscal year.

Mar'ie estimated that inflation during 1995-1996 would not likely exceed the 8.57 percent posted last fiscal year and projected a lower inflation rate for next year. (13)