New Govt to Consider Adequate Fiscal Requirement

TEMPO.CO, Jakarta - Finance Minister Chatib Basri said that the new government should contemplate adequate fiscal requirement to carry out programs and support economic growth, Antara News reported.

"I believe that the governments revenue will not be good and with quality as well as support Indonesias economy, if there is no fiscal space," Chatib Basri said on Wednesday.

Chatib said that the fiscal health must be very helpful in supporting infrastructure development and improving the quality of bureaucratic reform programs, so that the stability of the national economy could be maintained properly.

He explained that one of the solutions that can be pursued to widen the fiscal space is by increasing subsidized fuel prices and establishing fixed subsidies, which can provide flexibility around Rp200 trillion.

However, the policy cannot be operated easily because a lot of political implications are necessary. Increasing subsidized fuel prices can boost rate of inflation and raise the number of poor people.

"Any increase in fuel prices will have an impact on inflation and increase the number of poor people. So, proper mitigation efforts should be taken, so that poor people do not get weighed down by inflation," he affirmed.

According to Minister Chatib, the proper time for the new government to adjust subsidized fuel prices is in early year because more budget can be saved and fiscal space can be guaranteed.

"If the government adjusts subsidized fuel prices earlier, it will be beneficial. For example, if subsidized fuel prices are increased to Rp1000, with a quota of 48 million kiloliters, then Rp48 trillion can be saved and if prices are increased in mid-year, it will be only Rp24 trillion," he emphasized.

The current government is drafting the 2015 state budget without involving the new government, which will be inaugurated in October 2014. The next government has been given the freedom to realize new political appointments in the 2015 state budget.

ANTARA