"Therefore, limitation of subsidized fuel consumption must be carried out for the sake of fiscal health," Deputy Finance Minister Anny Ratnawati said.
Jakarta (ANTARA News) - The budget deficit set at 1.65 percent of the Gross Domestic Product (GDP) will increase if subsidized fuel consumption is not controlled, Deputy Finance Minister Anny Ratnawati said.

"Therefore, limitation of subsidized fuel consumption must be carried out for the sake of fiscal health," the deputy minister said after attending a coordination meeting on fuel oil control with governors here on Tuesday.

Anny said that the efforts to limit the consumption must be made through coordination between the central government and regional governments. This is because the operation to controlling consumption is in the hand of provincial and district governments.

"I want to explain that the burden of subsidy expenditure can cause deficit to exceed the limit as tolerated by the law," she said.

She said that the consumption control could not guarantee that the subsidized fuel quota would not be exceeded. It is predicted that it could reach 49 million kiloliters at the end of the year. Actually there is subsidy expenditure that could be economized.

"If it is limited, it will still exceed the quota as set in the state budget now. So, increase in subsidy expenditure will remain but we can control deficit," she said.

The government in the 2013 state budget allocated Rp274.7 trillion in subsidy expenditure with a subsidy for the electricity sector amounting to Rp80.9 trillion and for fuels accounting for Rp193.8 trillion with a total volume of 46 million kiloliters.

The volume of fuel quota could reach 53 million kiloliters if no appropriate policy is taken to control fuel consumption which has continued to increase.

A number of options have surfaced, among others, limiting consumption, increasing fuel oil prices, using RON-90 type of fuel and others.

Economic analyst A. Prasetyantoko of the Atma Jaya Catholic University said earlier that raising the price of fuel was the best option, and was better than limiting consumption.

"It is likely that the government will take consumption limitation. But in my opinion the best choice is raising prices," he said.

He said that consumption limitation would require the government to prepare adequate infrastructure with regard to its supervision and control.

"I am afraid that if the government takes the consumption limitation option, the infrastructure is not yet ready," he said.

He said that the government should think of the significant impacts of all available options if it was to control fuel oil consumption.

He said that limitation and price increase would both have impacts on high inflation, but its control efforts would become more significant if the government raised subsidized fuel prices.

Prasetyantoko suggested a moderate price increase by about Rp1,500 per liter from the present Rp4,500 per liter to Rp6,000 per liter.(*)

Editor: Heru Purwanto
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