Finance Minister: No Talk of Fuel Price Hike Yet
20 March 2014 12:38 WIB
TEMPO.CO, Jakarta - Coordinating Minister for the Economy Hatta Rajasa said there has been no talk of raising the price of subsidized fuel. "I do not want to speak before there is any talk of raising fuel prices. The World Bank determines it, not us," Hatta said in his office yesterday.
Nevertheless, Hatta ensured that the government will keep working on maintaining fiscal sustainability and credibility. One way is by securing the current account deficit at three percent of the gross domestic product (GDP).
The current price of crude oil, according to Hatta, is still within a sound range. However, domestic consumption volume must be kept in line with the economic growth.
"What's important is for us to maintain a credible and sustainable fiscal [conditions]."
Previously, the World Bank estimated that Indonesia's subsidized energy expenditure in 2014 would reach 2.6 percent compared to the GDP. This estimation is higher than last year's actual spending in subsidized energy that only had a 2.2 percent ratio over the GDP.
Chief economist of Bank Mandiri, Destry Damayanti, asked the government to pay more attention to the risk of an expansion in the budget deficit due to a surge in this year's subsidized energy expenditure.
An increased in subsidized energy spending, Destry added, would raise expenditure burden—triggered by an increase in fuel consumption and oil price realization that exceeds the State Budget assumption, among others.
In the past five years, Indonesia's energy subsidy spending continues to increase. This year, the government allocates Rp282.1 trillion for energy subsidy, a very high increase compared to the 2010's total energy subsidy spending of Rp143.79 trillion. (*)