Govt seeks extra Rp 2t in budget cushion amid high oil prices

Tag : Cushion
Govt seeks extra Rp 2t in budget cushion amid high oil prices
Aditya Suharmoko , The Jakarta Post, Jakarta
The government and lawmakers are working on accumulating an extraRp 2 trillion (US$218.98 million) in a budget cushion to anticipatehigh crude oil prices.
In a meeting with the House's budget committee Tuesday evening,Finance Minister Sri Mulyani Indrawati said the government woulduse the cushion if the Indonesian Crude Price (ICP) -- thecountry's benchmark oil price -- averaged $150 per barrel over therest of 2008.
The figure would be on top of the Rp 8.25 trillion already providedfor a similar purpose -- with the government having spent it all inthe first semester.
The Finance Ministry predicts the ICP to be at $145 per barrel onaverage between July and December, reaching a full-year price of$127.2 per barrel.
Light sweet crude in New York was traded at $138.74 per barrelWednesday, after reaching an all-time high of $147.27 on Friday, APreported.
The extra cushion is designed to accommodate the government'spledge to not raise domestic fuel prices again, having done so inMay, in what critics say is a populist way to lure public supportahead of next year's general elections.
The government estimates subsidies to reach Rp 236.1 trillion inthe second half of this year, more than double the Rp 91.7 trillionspent on subsidies in the first semester.
The fuel subsidy is estimated at Rp 119.8 trillion, up from Rp 60.5trillion; electricity subsidy Rp 62.1 trillion, up from Rp 26.4trillion; and non-energy subsidies Rp 54.2 trillion, up from Rp 4.8trillion.
"The composition of the state budget for subsidies is higherthan for government offices, including salary payments (to civilservants)," Sri Mulyani said.
At the meeting, the government also asked for the House's approvalto allocate Rp 1.2 trillion for other crucial needs, and Rp 900billion for election supervisory body, Bawaslu.
Indonesia will hold its third democratic elections next year. Thecampaign started early this month.
"Other crucial needs include, for example, support for naturaldisasters," the ministry's head of fiscal policy AnggitoAbimanyu said after the meeting.
Macroeconomic assumptions 2008

Semester II Full-year
Economic growth (%) 6.13 6.19
Inflation rate (%) 11.4 11.4
Rupiah per dollar 9,239 9,250
BI rate (%) 10.0 9.1
ICP ($ per barrel) 145.0 127.2
Oil output (bpd) 928,000 927,000

Source: Finance Ministry
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