Deficit may rise due to additional subsidies
Aditya Suharmoko, THE JAKARTA POST, JAKARTA | Sat, 02/27/2010 12:16 PM
The 2010 budget deficit may increase to Rp 132.2 trillion (US$14.15 billion), or 2.1 percent of Indonesia's gross domestic product (GDP), with the revision of the 2010 state budget, a minister said.
The deficit rises from Rp 98 trillion set in the 2010 budget, which amounts to 1.6 percent of the GDP, as the government adds Rp 44 trillion more in subsidies, Finance Minister Sri Mulyani Indrawati said Thursday.
"The total of additional subsidies is Rp 44 trillion," Mulyani said after a Cabinet meeting at the state palace.
Fuel subsidies will be raised by Rp 20 trillion from Rp 68.7 trillion allocated in the 2010 budget; electricity subsidies raised by Rp 16.7 trillion from Rp 37.8 trillion allocated in the budget; fertilizer subsidies Rp 4.4 trillion from Rp 11.3 trillion allocated; and food subsidies by Rp 2.8 trillion from Rp 11.4 trillion allocated, she elaborated.
Mulyani said the additional subsidies would be finance by the 2009 budget surplus of Rp 38 trillion. "*There will be* new added loans of Rp 1.2 trillion," she added.
The planned revision of the 2010 budget is expected to be submitted to the House of Representatives on Monday for discussion, she said.
The government also changed some macroeconomic assumptions. The Indonesian Crude Price is revised up to $77 per barrel from $65 per barrel; the rate of rupiah per dollar is revised to Rp 9,500 from Rp 10,000; the rate of three-month central bank's bill to 7 percent from 6.5 percent; and inflation to 5.7 percent from 5.5 percent.
Economic growth remains at 5.5 percent and oil production at 965,000 barrel per day.
Mulyani warned against a possible downside risk of oil production because of the implementation of the 2009 law on environmental protection and management.
Director General of Oil and Gas Evita Herawati Legowo at the Energy and Mineral Resources Ministry said Wednesday the law might cut oil production up to 40 percent as many oil and gas companies would be unable to comply with some environmental requirements stated there.
