If the price of fuel oil does not rise, it will affect the country's fiscal condition because one-fourth of the country's revenue will need to be used to subsidize fuel oil, he explained and then asked journalists attending an online press conference on Friday to deliver this message to the people.
The current global economic uncertainty is fuelling a continued surge in global oil prices. The global oil price reached US$105 per barrel in the January–July 2022 period on average, the minister informed.
In comparison, the estimated oil price in the state budget was much lower at US$63–US$70 per barrel.
"Today, if (the oil price is) US$100 per barrel, our subsidy can reach Rp500 trillion," the minister informed.
However, if the oil price per barrel rises above US$100, then the subsidy will need to be increased, he said.
This is also assuming that the dollar exchange rate is Rp14,500 compared to the current average of Rp14,750, and the government's quota rises from 23 million kilo liters to 29 million kilo liters.
Based on these figures, at least Rp500 trillion to Rp600 trillion will have to be allocated from the state budget for the fuel oil subsidy, Lahadalia noted.
"Rp500–Rp600 trillion is equal to 25 percent of the total state budget revenue that we use for subsidy. I believe that this is quite unhealthy," he observed.
Therefore, people need to understand the current condition. This can also be a collective momentum to help one another to keep the country's fiscal condition healthy, he added.
Indonesia is currently experiencing an economic recovery, with national economic growth reaching 5.44 percent in the second quarter of 2022 and the annual inflation rate maintained at 4.35 percent in June 2022.
In addition, Lahadalia pointed out that a rise in fuel oil prices is a regular occurrence in Papua.
The minister, who grew up in Papua, recalled that the fuel oil price in Papua once touched Rp19 thousand per liter.
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Translator: Ade irma Junida, Fadhli Ruhman
Editor: Rahmad Nasution
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