State budget 'healthy' even if oil hits $150

Aditya Suharmoko , The Jakarta Post , Jakarta | Thu, 06/12/2008 10:18 AM | Business

The 2008 state budget will remain sustainable -- even if oil prices reach US$150 per barrel and domestic fuel consumption exceeds the budgeted tolerance limit of 39 million kiloliters this year, an official says.

"The government has calculated (the sustainability of the state budget) with oil prices reaching an average $150 per barrel to the end of the year," Finance Ministry fiscal policy head Anggito Abimanyu said on Wednesday.

Anggito said if oil prices were hovering between $135 and $150 per barrel, state revenue would be greater than state expenditure, meaning the state budget would remain fairly intact.

In London, Brent North Sea crude oil fell to $131.02 per barrel, after hitting a historic peak of $138.12 on Friday, AFP reported.

High oil prices forced the government to increase fuel prices on May 24 by an average 28.7 percent. However, the increase does not seem to have stopped people using private vehicles, as traffic jams continue daily in the capital, and consumption remains high.

Fuel consumption reached 16 million kiloliters in May, and would reach between 39 million and 41 million kiloliters by the end of the year, the ministry says.

Fuel consumption is predicted to be comparatively high over the Idul Fitri holiday (which will fall on Oct. 1 and Oct.2) when most Jakartans will leave for their hometowns, either in private vehicles or using public transportation.

House of Representatives' budget committee vice chairman Suharso Monoarfa said larger-than-expected fuel consumption would not have an impact as long as the government could strike a balance between state revenue and expenditure.

The government should have been able to control fuel consumption with its so-called Smart Card program, Suharso said.

The government is delaying the program until further notice, stating a lack of infrastructure and costs were obstacles.

For next year, the Finance Ministry estimates fuel consumption will reach 42.8 million kiloliters, 20.4 million kiloliters of which would be Premium gasoline.

It predicts the consumption of diesel to be 12.6 million kiloliters, kerosene 5.8 million kiloliters and liquefied petroleum gas (LPG) 4 million kiloliters.

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