Fuel subsidies exceed 2005 budget target

The government has already disbursed Rp 78 trillion worth of fuel subsidies until middle of September 2005. This means the fuel subsidies have already exceeded the state budget allocation of Rp 76.5 trillion for the whole year. The government is expecting that the House of Representatives will agree to raise the subsidy amount to Rp 89.2 trillion, the Bisnis Indonesia newspaper reported in its Saturday edition.

Ministry of Finance’s director general for state budget Mulia T. Nasution said the government will try to have at least Rp 11 trillion to pay for the fuel subsidy in the remaining three months.

“The government will implement the second scenario so that it will have Rp 11 trillion to pay for the fuel subsidies until the end of the year,” Mulia said in Jakarta on Friday.

The House of Representative recommended two alternatives in case of fuel subsidies. The first one was to allocate Rp 113.7 trillion for fuel subsidies with a consequence of a budget deficit of Rp 46.3 trillion or 1.7 percent of the Gross Domestic Product.

The second was to allocate Rp 89 trillion for subsidy and raise fuel prices. The government opted for this alternative.

The government and the House commission are deliberating on a revised figure for 2005 fuel subsidies.(*)