T

he Finance Ministry is indicating that it may submit a draft revision to the 2012 state budget sooner than planned due to the rising price of crude oil and national oil production falling below expectations.

Finance Minister Agus Martowardojo said on Friday that the debate over the electricity and fuel subsidies had also made matters worse for state finances.

The government originally planned a 10 percent hike in the electricity tariff in January. The hike was delayed after the Energy and Mineral Resources Ministry said that it would be better to make a decision on fuel subsidies before discussing the electricity tariff.

The government had also planned to launch a fuel restriction program on April 1 to compliment a gradual fuel-to-gas conversion process for vehicles. But it later admitted at a House of Representatives hearing that there were too many complexities in carrying out these measures.

Agus said that uncertainties over the subsidies and the government’s miscalculation over some of its goals were reasons for an earlier revision to the 2012 state budget to be submitted. Revisions have traditionally been submitted in the middle of the year.

“We are going to propose a state budget revision and this must be done because of three things. Firstly, the Indonesian Crude Price (ICP) has surpassed the US$100 price level, from an original estimate of $90. Secondly, we have low realization of a lift in our oil production. And now, there is also an indication that our planned power tariff hike will not be implemented in the near future,” Agus said.

Agus said that if all stakeholders still wanted to maintain the current electric tariff and fuel subsidy, the government might propose some spending cuts.

“The spending cuts will be discussed in an internal government forum so that our budget can remain healthy, sustainable and credible. Maintaining these values are important because we have been good in managing our budget in recent years,” he said.

“Last time, we had a [budget] deficit of 1.5 percent and, if uncertainties remain uncertain, then our deficit might exceed 1.5 percent. We do not want this to happen,” he added.

Agus said that he could not say where spending would be cut by the government in its revision, because the plan was still under discussion.

Separately, one of the deputy chairmen at the House Commission XI on banking and finance, the Golkar Party’s Harry Azhar Azis, said that Agus’ plan to submit a revision to the state budget early was the right thing to do.

“It [a faster revision] is a good policy, especially if we consider the fact that the international oil price is now at $115, far above our assumption that it would stay at $90. Due to this, we need around Rp 55 trillion to cover the fuel subsidy, while on the other hand, the proposed fuel restriction plan would only ease fuel subsidy pressure by between Rp 7 trillion and Rp 8 trillion,” he said.

“So, we do need a revision of the budget as soon as possible,” he added.