The government may add an extra Rp 5 trillion (US$505 million) to the emergency reserve in the 2010 state budget to prevent a rise in crude oil prices from undermining the budget.
"From (the existing allocation of) Rp 5.6 trillion, we want to add between Rp 3 trillion and Rp 5 trillion *more*," Anggito Abimanyu, the Finance Ministry's head of fiscal policy, said Friday, citing oil prices as the most risky macroeconomic assumption.
He said oil prices would likely rise as the world economy recovered.
The International Energy Agency (IEA) on Thursday raised its estimate of world oil consumption to an average 85.7 million barrels per day in 2010, up 450,000 barrels from its last figures, as China and the US needed more oil, said Bloomberg.
Oil futures in New York were traded above $72 per barrel on Thursday, advancing 62 percent this year due to growing optimism about the global economic recovery.
The sharp increase in crude oil prices last year forced the government to raise the price of subsidized fuels as the 2008 state budget was burdened by bigger fuel subsidies.
Anggito said the extra fiscal risk cushion funds would be taken from the optimization of budgets of ministries and government agencies.
"But there will not be a cut to their budgets. It will be taken from the results of optimization," he said.
The government and the House of Representatives expect the planned 2010 budget to be wrapped up before current lawmakers end their term by the end of this month.
This year the government has allocated a fiscal risk cushion of Rp 15.8 trillion.
The government expects to have oil lifting capacity next year of 965,000 barrels per day with the Indonesia Crude Price (ICP) assumed at $65 per barrel next year.
This year's oil lifting is estimated to reach 960,000 barrels per day, while the ICP is assumed at $61 per barrel, based on the 2009 budget.
"With the on-stream in oil and gas projects, we are quite optimistic (the assumptions) can be reached," said Anggito.
He added that the government still considered the ICP assumption at $65 per barrel as "adequate", and it was less likely this would change.
Suharso Monoarfa, vice chairman of the House's budget committee, said Rp 8.6 trillion of fiscal cushion would be enough to safeguard the 2010 budget against possible increase in oil prices.
In the planned 2010 budget, fuel subsidies are predicted to reach Rp 68.73 trillion, up Rp 9.75 trillion from Rp 52.93 trillion allocated this year.
