"Fuel subsidies may increase by up to 60 percent of the allocations set in the revised state budget," World Bank chief economist Shubham Chauduri said here on Wednesday.
Under the revised 2012 state budget, the government has set fuel subsidies at Rp137.4 trillion, electricity subsidies at Rp65 trillion and energy risk reserves at Rp23 trillion.
Shubham said the economic price of premium subsidized gas currently reached Rp10,500 a liter, or Rp6,000 higher than the government-set price of Rp4,500 a liter.
"This requires the government to pay the difference between the original price and subsidized price," he noted.
He also noted that the global crude price was hovering above US$122 per barrel, well above the average Indonesia crude price (ICP) of US$105 per barrel set in the revised 2012 state budget.
He suggested that the price of subsidized fuel be raised so it does not add to the burden of the state budget, as well as to add certainty about a budget deficit set at 2.23 percent of the gross domestic product (GDP), or Rp190.1 trillion.
He said the delayed increase in the price of subsidized fuel might raise the budget deficit to 3.1 percent of the gross domestic product or Rp269.2 trillion.
(Uu.S012/INE/KR-BSR/H-YH)
Editor: Priyambodo RH
Copyright © ANTARA 2012
