A slump in the global price of oil, which has fallen to below US$30 per barrel, may lead the government to revise a number of its economic assumptions for the 2016 state budget, a minister has said.
Finance Minister Bambang Brodjonegoro said the falling oil prices would cause a decline in state revenues and the Indonesia crude price (ICP) assumptions in the 2016 state budget.
'The state revenues will definitely decrease because of the slump in oil prices,' he said in the House of Representatives complex in Jakarta on Monday evening.
In the 2016 state budget, the government has set an ICP assumption of $50 barrel, while state revenues from the oil and gas sector was expected to reach $11.65 billion.
Concerning the situation, Bambang said, the government would revise its 2016 state budget but he refused to give details of the figures in the revised budget. 'Many parties have predicted our revenues would be lower. Thus, there will be a [budget] revision,' he said.
The Finance Ministry's Fiscal Policy Office (BKF) head Suahasil Nazara said the government would release the details of the revisions before the deliberation period of the 2016 state budget began.
'Oil price assumptions in the revised state budget will certainly be lower. How many percent the decline is, we are still counting it. Meanwhile, our economic growth assumption will be still at 5.3 percent,' said Suahasil.
On the same occasion, Bank Indonesia Governor Agus Martowardojo said the central bank would remain cautious about the downward trend in oil prices, which could lead to a global economic contraction.
He added that oil prices had fallen to around $30 per barrel because of oversupply. Still, there was no agreement from the Organization of the Petroleum Exporting Countries (OPEC) to reduce production.
"This pressure will make the global economy grow, but not as had been expected," Agus said.
Earlier, the World Bank warned that a continuing economic slowdown in emerging markets will cause substantial spillovers into developing economies and eventually hold back the recovery in advanced economies.
As a result, the bank cut its forecast for global economic growth in 2016 to 2.9 percent from its initial projection of 3.3 percent. The economic growth projection for Indonesia was also slashed to 5.3 percent from an initial projection of 5.5 percent.
As of Jan. 18, Brent crude, the global oil benchmark, slid to $28.72 per barrel on London's ICE Futures exchange. Earlier in the session, Brent fell as low as $27.67 per barrel, its lowest level in nearly 13 years. Meanwhile West Texas Intermediate (WTI) crude stood at $30.02 per barrel on the New York Mercantile Exchange. (ebf)