Govt pours trillions in poverty program

The Jakarta Post, Jakarta

Prior to its fuel price hike plan in April, which will eventually reduce budget expenditures for the fuel subsidy, the government has been preparing an additional Rp 10.5 trillion (US$1.13 billion) from the budget to assist the poor.

"The Rp 10.5 trillion fund will be added to the Rp 7.3 trillion already allocated for poverty programs in the 2005 state budget," Coordinating Minister for the Economy Aburizal Bakrie announced on Friday after a Cabinet meeting.

The fund, a new item in the budget this year, is aimed at easing the impact of the fuel hike for low-income families and will total Rp 17.8 trillion, of which the largest portions will be for education, the provision of rice and the construction of rural infrastructure.

Aburizal corrected his own statement, saying that the fuel price hike would be on April 1 instead of April 15 as he had said on Thursday.

Vice President Jusuf Kalla had said earlier that the government would make a decision on the amount of the fuel price hike in the coming weeks.

Regarding the world oil price that surged to more than US$40 per barrel, State Minister of National Development Planning Sri Mulyani Indrawati said the government must allocate Rp 58 trillion for the oil subsidy.

She said the government would revise the 2005 state budget by mid March or early April, adding that the decrease in the fuel subsidy and resulting price rise would have a direct impact of between 1 percent and 2 percent on the wallets of the poor.

Previously, the Central Statistics Agency had warned that the fuel price hike would affect the national inflation rate and prices for commodities were likely to increase before the hike.

Responding to the matter, economist Faisal Basri of the University of Indonesia offered several schemes in which the government could minimize the social impact.

"About 70 percent of the fuel subsidy has been enjoyed by the rich. The government was supposedly using the Rp 60 trillion fuel subsidy to help the poor," he said in a discussion with journalists.

Faisal reminded the government that the fuel price hike should not trigger the increase of electricity prices in the country.

"The government should immediately convert the use of diesel fuel to natural gas in an effort to cut operational costs," he said, referring to the diesel-powered generators used to produce electricity.

He also said the price of public transportation should not be raised by much.

Earlier on Friday, Minister of Transportation Hatta Radjasa said there would not be any increase in prices for inter-city land transportation if the government does not increase fuel price by more than 20 percent.

Faisal also offered another option in which the government should have implemented and provided the fund for the poor first before increasing prices, while adding that housing, food and transportation for the poor should have been made top priorities.

Another speaker Enceng Shobirin of the Institute of Research, Education and Information of Social and Economic Affairs (LP3ES) emphasized the need for transparency in the use of the money for the poor.

I-box

Low-income assistance fund

Scholarships for 9.6 million students Rp 5.64 trillion Rice for 8.6 million poor people Rp 5.44 trillion Infrastructure development in 26,737 villages Rp 3 trillion Health services for 36.1 million poor people Rp 2.17 trillion Provision of 225,000 low-cost houses Rp 0.6 trillion Subsidy for family planning program Rp 0.1 trillion Subsidy for microcredit interest Rp 0.2 trillion Social services Rp 0.65 trillion

Total Rp 17.80 trillion