Indonesia is unlikely to risk any further oil price hikes to ease budgetary pressure during 2005 after widespread protests greeted a 29 percent rise earlier this month, a senior minister said Monday. Information Minister Sofyan Djalil told reporters that the government was prepared to soften the blow of rising world oil prices on its low-income population by maintaining fuel subsidies at current levels. "I don't think it is politically possible for this government to raise oil prices in the near future if you see the problems," Djalil said.
Indonesia raised fuel prices at the beginning of March to trim heavy subsidies that shielded its poor from escalating prices but drained state coffers of funds desperately needed to revive an underperforming economy.
Angry demonstrations broke out across the country in response to the move although they stopped short of the unrest that greeted similar price hikes in 1998 contributing to the downfall of former dictator Suharto.
The increases came after the government last year spent 61 trillion rupiah (6.4 billion dollars) on subsidies to offset oil prices rocketing over the 50 dollars a barrel mark, surpassing budget forecasts of 25 dollars. Djalil said that even through this year's draft budget allows for oil prices of just 35 dollars per barrel far lower than Monday's 54.84 dollars the government could take up the slack.
He said Indonesia's own current oil price was about 40 dollars a price eased by domestic supplies and the budget could withstand further increases provided the price remained below 50 dollars.
Meanwhile Economic Minister Abdurizal Bakrie said Monday that the government had no intention of revising its budget price assumption of 35 dollars because a fall in world oil prices was anticipated. He added that if this did not materialise, the government was prepared for the resulting cost.
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