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Sri Mulyani says high oil prices weighing on state budget
The finance minister noted that energy subsidy costs were swelling.
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A police officer guards a Pertamina fuel station on Jl. MT Haryono in South Jakarta after a fuel tanker caught fire on Dec. 1, 2020. (JP/Wendra Ajistyatama)
F
inance Minister Sri Mulyani Indrawati said on Monday that soaring global oil prices had hit home as the state budget bore the costs of swelling fuel and electricity subsidies.
Ministry data from Monday shows that subsidy spending in the first two months of 2022 reached Rp 11.48 trillion (US$799.72 million), exceeding the pre-pandemic level of Rp 10.73 trillion during the same period in 2019.
This is on top of the government’s unpaid subsidies and compensations from last year – Rp 10.17 trillion and Rp 109 trillion, respectively. The compensations are payable to state-owned oil giant Pertamina and state-owned electricity company PLN.
“The consequences now rest with the subsidies. With the rise in international prices, these will weigh on the state budget,” said Sri Mulyani.
Read also: High oil prices put new strains on state budget
International oil benchmark Brent reached US$110 a barrel on Tuesday, much higher than the $63-per-barrel assumption in the 2022 state budget. The assumption was used as a baseline to calculate expected annual fuel subsidies.
Despite the price hike, the government has chosen to stick with current subsidized prices, preventing SOEs in the energy industry from adjusting to market fluctuations.
