"If we don`t do anything the budget deficit could reach over 4 percent. This will result in a violation of the state finance regulations. Therefore, spending must be cut," he said in a press statement here on Friday.
In view of that, he said, the government has taken various measures such as cooperating with the parliament to discuss proposals to raise the price of subsidized fuels to cut excessive expenditure.
The subsidy has increased after the average price of crude oil reached US$110 per barrel while the assumption for the budget has been set at only US$90 per barrel.
Boediono said the government had also prepared compensation packages for people who would be hit hard by the price hike.
The compensation includes cash handouts, infrastructure stimulus to improve public services, and gasoline-to-liquefied gas conversion.
The vice president hoped the regional government would secure the policy now being discussed for an agreement by the government and the parliament.
The vice president also asked the government to prioritize communication to secure the policy for at least six weeks after the hike is announced.
Routine coordination between provincial, district and city and central administrations would be crucial for securing the policy.
"I asked regional leaders to pay careful attention to inflation due to current conditions, in which the price of crude oil has risen beyond the normal level of only 5 percent to 25 percent. Speculation like this must be avoided," he remarked. (*)
Editor: Kunto Wibisono
Copyright © ANTARA 2012
