Subsidy may increase state budget by Rp70 trillion

Subsidy may increase state budget by Rp70 trillion

Agus D.W. Martowardojo. (ANTARA)

"We are facing a challenge with additional state expenditure."
Jakarta (ANTARA News) - Indonesian Finance Minister Agus Martowardojo said the 2013 State Budget can increase by Rp70 trillion if consumption of subsidized fuel oils in 2013 increased from 46 million kiloliters to 48 million kiloliters.

"If subsidized fuel oil consumption in 2013 is not controlled it could reach 48 million kiloliters and that will increase the budget by Rp70 trillion," the minister said here over the weekend.

He said that the estimate was however still could change if the Indonesian Crude Price (ICP), the value of the rupiah currency exchange rate and state revenues also change.

The minister however said that the state budget deficit would remained to be controlled at a rate of about 1.64 percent.

"We are facing a challenge with additional state expenditure. We need to response this by optimizing the efforts to increase tax and non-tax revenues (PNBP)," he said.

Treasury Director General Herry Purnomo said meanwhile that the swelling of state budget with additional Rp70 trillion could happen if the subsidized fuel quota is increased by two million kiloliters, except if the government takes a policy to raise fuel oil prices.

Acting chief of the Fiscal Policy Agency Bambang Brodjonegoro hoped that in 2013 the government would continue to control subsidized fuel consumption so that it would be in line with the quota set by the government at 46 million kiloliters.

For this purposes, Bambang asked the ministry of energy and mineral resources to soon diversify energies by maximizing the use of gas and other alternative energies and reduce dependence on fossils energy.

"If there is plan to use gas, it should be done immediately with a clear aim and target," Bambang said.

He also expressed hope that the use of subsidized fuel oils should on on-target through a firm policy, so that financially capable consumers would no longer use subsidized premium gasoline and diesel oil.

In the meantime, the Indonesian Chamber of Commerce and Industry (Kadin) has asked the government to phase out subsidies for fuel oils so that the funds could be used development of infrastructure in the regions.

"Kadin has asked the government to eliminate fuel oil subsidy because so far it is enjoyed not only by financially weak people but also those who are categorically financially able consumers," Kadin Chairman Suryo Bambang said here on Tuesday.

He said that fuel subsidy must be lifted and should be returned to poor people in other forms. Suryo cited as an example that about Rp5 trillion of the subsidy should be given to provinces to build regional infrastructural facilities.

The subsidy funds could also be used for education and for assisting locals` business units, particularly small and medium businesses.

In 2013, subsidy burden has reached Rp274 trillion, and it is predicted that it would swell up to Rp300 trillion, he said.

In the 2013 state budget, the assumption of fuel oil subsidy was set at Rp193.8 trillion, consisting of Rp193.3 trillion in current subsidy and reduction of subsidy in 2011 amounting to Rp3.5 trillion.

Subsidies for fuel oils and biofuels amounted to Rp140.46 trillion, liquefied natural gas in 3 kg cylinder Rp26.45 trillion and sales tax Rp17.26 trillion plus subsidy reduction.