"We must not become careless. Rising inflation can be a threat to the national economy," Soesatyo delivered the statement during the 2022 Annual Session of the People's Consultative Assembly and the Joint Session of the House of Representatives and Regional House of Representatives here on Tuesday.
He cited data from Statistics Indonesia, which said that as of July 2022, Indonesia's inflation rate sat at the level of 4.94 percent, and it was estimated to increase in the range of five to six percent in August.
"Even in September 2022, it was predicted that we would face the threat of hyperinflation, with inflation rates in the range of 10 to 12 percent. The rate of increase in inflation is coupled with biting food and energy prices, making it even more difficult for people, who have just (made it out of) the COVID-19 pandemic," he remarked.
Soesatyo also drew attention to the skyrocketing world oil prices in early April 2022 that had been estimated to reach US$98 per barrel. This figure exceeded far beyond the 2022 state budget assumption of US$63 per barrel.
Moreover, the total subsidies for fuel, Pertalite, diesel, and LPG had reached Rp502 trillion, he noted.
"An extreme increase in oil prices will certainly make it difficult for us to seek additional subsidies to reduce pressure from inflation. No country has provided such a large subsidy," he pointed out.
Furthermore, he also suggested to take into account Indonesia's fiscal and monetary conditions in facing the risk of global crisis.
The issues in the fiscal sector included normalization of the budget deficit, maintaining the foreign debt-to-gross domestic product ratio and sustaining infrastructure financing.
"From a monetary perspective, the biggest challenge is bringing the inflation rate under control, maintaining foreign exchange reserves, and (maintaining) stability of the rupiah exchange rate," he concluded.
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Translator: Benardy F, Mecca Yumna
Editor: Sri Haryati
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