Finance Ministry monitors oil pricing following Iran-US tension

Finance Ministry monitors oil pricing following Iran-US tension

Finance Minister Sri Mulyani Indrawati (right) accompanied by Deputy Minister Suahasil Nazara (left) deliver a press statement on the realization of the 2019 State Budget (APBN) as of the end of November at the Ministry of Finance Office, Jakarta, Thursday (12/19/2019). Antara Foto / Indrianto Eko Suwarso / pras

Jakarta (ANTARA) - The Ministry of Finance will continue to monitor the movement of world oil prices in the midst of the escalating tension between Iran and the United States.

"There is a spike in tension in the Middle East that influences the movement of oil prices. Of course, we will continue to pay attention to this," Deputy Finance Minister Suahasil Nazara stated here on Tuesday (Jan 7).

Suahasil highlighted the significance of monitoring the global oil prices based on the fact that oil prices are one of the key variables in the management of the state budget that can influence government revenues and expenditures.

However, he believes the implementation of the state budget's performance not only paid attention to one macro assumption but also other instruments, such as the exchange rate and oil lifting.

"The effect on the state budget is not only oil prices but also the exchange rates and oil lifting. This is what we will update every month," Suahasil noted.

Hence, the potential of world oil prices increasing in the near future is not a cause for concern, taking into account the fact that the implementation of the 2020 State Budget has run for a few days.

"Our estimate is that the oil price in the 2020 State Budget is US$63 per barrel. We will see since it has only been running for seven days this January," Suahasil remarked.

On the occasion, the finance ministry also recorded achievements across macroeconomic assumptions outlined in the 2019 state budget, including economic growth of 5.05 percent or lesser than the targeted 5.3 percent.

The inflation rate is 2.72 percent, or lesser than the assumed 3.5 percent; the interest rate for three-month treasury bills (SPN) is 5.6 percent, or higher than the assumption of 5.3 percent; and the exchange rate is Rp14,146 per US dollar, or lower than the assumption of Rp15 thousand per US dollar.

Furthermore, the Indonesian crude oil is priced at US$62 per barrel or lower than the assumed $70 per barrel; oil lifting at 741 thousand barrels per day, or lower than the assumption of 775 thousand barrels per day; and gas lifting, 1,050 thousand barrels of oil equivalent per day, or lower than the assumption of 1,250 thousand barrels of oil equivalent per day.

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