Indonesia's Subsidized Fuel Price Will Rise to Relieve Government Budget Balance
This morning (30/04/13), president Susilo Bambang Yudhoyono delivered a speech in which he announced that the price of subsidized fuel will increase to relieve mounting pressures on the government budget deficit. Yudhoyono refrained from mentioning a new price level nor did he announce when the new measure will be implemented. He said that cash compensation programs for the poor need to be prepared first before adjustment of the country's subsidized fuel price can be executed.
The rise in Indonesia's subsidized fuel price will be limited and remains well below the market price of IDR 10,000 (USD $1.03) per liter. Analysts are speculating that the fuel price will rise from the current IDR 4,500 to IDR 6,500 per liter.
Currently, according to the state budget 2013, the country's total deficit is estimated to be around IDR 150.3 trillion (USD $15.5 billion) or 1.65 percent of the country's gross domestic product (GDP). This includes the government's allocation of IDR 193.8 trillion (USD $20.0 billion) for the fuel subsidies. However, this amount increases each year (due to rising global oil prices in combination with higher demand from Indonesians) and thus burdens the state budget.
Click here for a detailed column about the issue of Indonesia's subsidized fuel
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