TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Govt may further cut budget for state offices
The government may further cut budget allocations for state offices to compensate for the rise in subsidy costs amid increasing global oil prices, currently at above US$110 a barrel
Change Size
The government may further cut budget allocations for state offices to compensate for the rise in subsidy costs amid increasing global oil prices, currently at above US$110 a barrel.
State Minister for National Development Planning Paskah Suzetta said Friday the government might cut 15 percent of every government office's "non-priority budget", while maintaining the "priority budget" as it relates to people's welfare.
"We are currently focusing on some crucial sectors, such as education, public works, defense, health, agriculture and transportation," Paskah said after a meeting with Coordinating Minister for the Economy Boediono and Finance Minister Sri Mulyani.
The government earlier cut up to 15 percent of budget allocations for government offices.
Many offices complained of the cuts, saying they already had little funds for their programs.
If oil prices stay above $100 per barrel, Paskah said subsidy costs might rise to Rp 300 trillion ($32.6 billion).
Under the revised 2008 state budget, subsidy costs ballooned to Rp 208.6 trillion, more than double the Rp 97.9 trillion in the initial estimate.
Most of the subsidies are allocated for oil-based fuels and electricity, at Rp 106.2 trillion and Rp 55 trillion, respectively.
Many analysts say the government should raise the prices of fuels sold in the domestic market, to cap fuel subsidy spending. Paskah, however, rejected the possibility.
President Susilo Bambang Yudhoyono has pledged not to raise fuel prices until his current tenure ends in 2009, when the country will hold its second direct presidential election.
The government last raised fuel prices in 2005, by more than 100 percent.
Paskah also said the government was considering some scenarios to prepare for the impact of rising global oil prices.
Separately, Coordinating Minister for the Economy Boediono said the government was maintaining the current budget assumptions, although it could submit new ones before the budget revision was endorsed by the House of Representatives in early April.
"We were just exercising some possibilities, assuming the high oil prices," said Boediono.
In the budget assumptions, the government and the House have agreed to set oil prices at $85 per barrel, which economist Faisal Basri deemed as "realistic".
"I predict oil prices will go down between April and June," he said.
However, Faisal repeated calls for the government to raise the price of premium fuels by no more than 10 percent, so as not to be too much of a burden.
He said if the government insisted on maintaining fuel prices, it might have to bear a wider deficit than the estimated 2 percent of the country's gross domestic product.
