Oil and gas crucial to economic stability

Oil and gas crucial to economic stability

JAKARTA (JP): The government's revenues from the oil and gas sector will remain important in stabilizing the country's economy against internal and external factors, economist Sjahrir said yesterday.

Speaking at a seminar on Oil and Gas Indonesia 2020, Sjahrir said that even though Indonesia's macroeconomy had been much less dependent on oil and gas variables, oil and gas revenues would have different effects toward the economy, as compared to taxes.

The government's revenues from the oil and gas sector, projected to reach Rp 13.27 trillion (US$5.7 billion), will account for merely 20 percent of its total domestic revenues of Rp 66.26 trillion this fiscal year.

Oil and gas revenues accounted for 65.96 percent of the government's domestic revenues between 1992 and 1994.

Besides the domestic revenues, the government also expects to generate Rp 11.75 trillion in foreign aid this fiscal year.

Sjahrir contended that income and value added taxes, for example, had a contractionary effect on the economy. Whereas in the case of oil and gas taxes, no contraction occurred in the domestic economy.

The role of oil and gas was also very important for Indonesia's current account in the balance of payments, he said.

Current account deficits currently depend very much on oil and gas exports and the services of foreign debt, he said.

Indonesia produces some 1.5 million barrels per day of crude oil and condensate and its natural gas production stands at 2.94 trillion standard cubic feet per annum.(04/rid)