Government waits for the best moment to raise fuel prices

The government is waiting for the ?best moment? to raise the fuel prices from the current levels in a bid to curb its swelling fuel subsidy, Minister of Finance Jusuf Anwar has said.

Speaking in an interview with Bisnis Indonesia on Saturday, the finance minister said; ?the financial authority?s position in the planned increase in the fuel prices?. the sooner is the better.?

The finance minister said that if the fuel prices were not raised the government?s fuel subsidy would reach Rp 45 trillion in the second semester of this year or Rp 126.4 trillion in the whole year. He said that the new fuel prices would be based on the oil price reference of US$60 per barrel.

At the 2005 state budget, the oil price reference is fixed at US$45 per barrel. Under this price assumption, and with the rupiah exchange rate being fixed at Rp 9,300 against the U.S. dollar, the total amount of funds needed for oil subsidy reaches Rp 76.5 trillion.

With the actual price of the oil in the international market reaching US$66 per barrel, far exceeding the price reference, the government?s fuel subsidy would increase to about Rp 126 trillion. (*)