Soaring Oil Prices Halt Indonesia's Economy

"The increase in world's crude oil prices in turn cripples the State Budget "

Deputy Finance Minister, Mahendra Siregar, said the increase in subsidized fuel prices is inevitable as world's crude oil price and the global economic downturn have led to a halt in the economy. 

"The soaring prices of [world]'s oil prices have interrupted the economic growth. As a result, the economic growth is revised to 6.5 percent compared to the previous projection of 6.7 percent," said Mahendra today in a discussion.

As regards the planned rise in fuel prices, Mahendra said the government focuses more on the repercussion of the hiking world's oil price. The government looks ahead to further impact of the situation upon the State Budget.

"The increase in world's crude oil prices in turn cripples the State Budget following the huge fuel subsidies," he said.

Should the House of Representatives (DPR) nod to the proposed fuel subsidies, the government will allocate the budget to sectors that are more important.

To date, the government and House's Budget Committee accepted the 2012 Revised State Budget posture with fuel subsidies worth Rp 137 trillion (US$14.9 billion) and electricity subsidies worth Rp 64.9 trillion (US$7.06 billion).  

In the 2012 State Budget, the specified allocation for fuel subsidies reaches Rp 123 trillion while electricity subsidies get Rp 45 trillion.

Source : VIVAnews