Hence, there will be an increase of around Rp137 trillion to Rp151 trillion depending on the ICP.
Jakarta (ANTARA) - The government resorted to increasing fuel prices because its spending on subsidizing the prices continued to increase despite the recent decline in global oil prices, Finance Minister Sri Mulyani Indrawati explained on Saturday.

At a press conference at Merdeka Palace here, she said that the government made several calculations regarding the changes in Indonesian crude oil prices (ICP) and their impact on subsidies offered in the 2022 state budget.

Assuming an ICP of below US$90 per barrel or an average price of US$97 to US$99 per barrel throughout the year, the energy subsidy spending would still increase from the budget allocated by the government of Rp502.4 trillion to Rp653 trillion.

"Still, we continue to calculate it," the minister said.

Even with an ICP of US$85 per barrel, the subsidy would increase from Rp502 trillion to Rp640 trillion, she added.

"Hence, there will be an increase of around Rp137 trillion to Rp151 trillion depending on the ICP," Indrawati noted.

The government will continue to monitor global oil prices since currently, geopolitical conditions and global economic projections are still very dynamic, she added.

Meanwhile, President Joko Widodo said that the government will divert fuel subsidies to provide more targeted social assistance. Hence, there will be an adjustment in fuel prices.

The central government has allocated Rp12.4 trillion to provide direct cash assistance for 20.65 million families as well as Rp9.6 trillion for wage subsidy assistance to 16 million workers whose maximum salary is Rp3.5 million per month.

Local governments have also been asked to allocate 2 percent of the general transfer fund worth Rp2.17 trillion to provide transportation subsidies and additional social protection for the people in their respective regions.

At the same press conference, Energy and Mineral Resources Minister Arifin Tasrif informed that the price of subsidized Pertalite fuel has been revised to Rp10 thousand per liter from Rp7,650 per liter starting 2:30 p.m. Western Indonesian Standard Time (WIB) on Saturday.

The government has also revised the price of subsidized diesel from Rp5,150 per liter to Rp6,800 per liter. Meanwhile, the price of non-subsidized Pertamax fuel has been raised from Rp12,500 per liter to Rp14,500 per liter.

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Translator: Indra Pribadi, Uyu Liman
Editor: Rahmad Nasution
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