"If the price is not raised, not only the state budget but also the balance of payment will face difficulties because, since the middle of last year our balance of oil and gas has recorded a deficit, although for 50 years our oil and gas exports haveJakarta (ANTARA News) - The Bank Indonesia (BI) warned on Thursday that the country`s inflation rate might outstrip its inflation target of 5.5 percent for 2012 if the price of subsidized fuel oils is raised by more than Rp1,000 per liter.
"The inflation rate will surely depend on how much the price of subsidized fuel oils will be raised. If it is raised by more than Rp1,000 per liter, the inflation rate may surpass the BI-set target of 5.5 percent for this year," BI Governor Darmin Nasution said on the sidelines of a seminar entitled "Indonesia Economic Policy in Challenging Global Economy".
"If the price is not raised, not only the state budget but also the balance of payment will face difficulties because, since the middle of last year our balance of oil and gas has recorded a deficit, although for 50 years our oil and gas exports have exceeded imports," Darmin said.
This means that the price of Indonesia`s oil and gas is far different from international prices. Therefore, there is no alternative except to raise oil and gas output and reduce imports, he said.
"The deficit in the balance of oil and gas has led to a deficit in the current account, as a whole. The deficit may increase unless we respond to it properly by, among others, raising the price of fuel oils. By doing so, the people will begin to use fuel oil as efficiently as possible," he said.
He added that the state budget had originally called for the limitation of subsidized fuel consumption but, in reality, the government found it difficult to implement.(*)
Editor: Heru Purwanto
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