Seeking to allay concern about the impact of rising global oil prices on state finances, the government has emphasized that the 2018 state budget is designed to handle such market fluctuation.

“The increase in the ICP will, on the one hand, jack up our revenue; on the other hand, we must shoulder a higher [energy] subsidy,” the Finance Ministry’s budgeting director general, Askolani, said in Jakarta on Monday. The two state budget posts were designed to be flexible, he added.

The Indonesian Crude Price (ICP) – the government’s oil price benchmark – soared to US$66.6 per barrel on average in the first half of this year, which compares to $48 per barrel assumed in the 2018 state budget.

The government expects the higher-than-assumed ICP to result in a non-tax revenue windfall from the natural resources sector.

Hence, the government in its latest projection expects non-tax revenue of Rp 349.2 trillion ($24.15 billion) this year, far exceeding the Rp 275.4 trillion target stipulated in the 2018 state budget.

Meanwhile, the energy subsidy was projected to swell to Rp 163.49 trillion this year from the 94.52 trillion initially stated in the budget. (bbn)