Govt not to raise fuel oil prices this year: minister

Antara News, Tuesday, January 12, 2010 23:02 WIB

Jakarta (ANTARA News) - The government gave assurance on Tuesday that it will not raise domestic fuel oil prices although global oil prices are escalating to the level of US$80 a barrel, a minister said.

The current rise in global oil prices had prompted the government to change the assumed oil price in the 2010 state budget to US$80 from US$65 a barrel, Finance Minister Sri Mulyani Indrawati said at the presidential office here.

"We have just discussed energy subsidy. Since there will be no domestic fuel oil price hike oil subsidy will be raised," she said after attending a limited cabinet meeting.

The minister said a change in the assumed oil price to U$80 from US$65 a barrel and the rupiah`s exchange rate to Rp9,500 from Rp10,000 per dollar will increase fuel oil subsidy to Rp96.1 trillion from Rp68 trillion.

Electricity subsidy is projected to increase to Rp53.2 trillion from Rp37.8 trillion and rice and fertilizer subsidy to Rp59.5 trillion from Rp51.3 trillion, she said.

"However, the government will receive an additional state revenue of Rp39 trillion from oil price hike," she said.

She said the government will also raise the inflation rate target to 5.5 percent from 5 percent and the assumed interest rate on Bank Indonesia promissory notes (SBI) for three-month deposit to 6.8 percent from 6.5 percent.

Given the change in macro-economic assumptions, state receipts and expenditures in the 2010 state budget will change with the budget deficit expected to soar to Rp128.7 trillion or 2.2 percent of the gross domestic product (GDP), from Rp1.8 trillion or 1.8 percent of the GDP, she said.

She said the government has decided to use 2009 state budget leftover amounting to Rp38 trillion to meet part of financing target in the 2010 state budget.