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Soaring global oil prices, which are now hovering at around
the US$80 a barrel level, are unlikely to widen the 2007 budget
deficit, which has been estimated at 1.5 percent of the gross domestic
product (GDP), an official says.
The current price is far above the government's assumption of $60 a
barrel, as stated in the recently adopted 2007 revised budget.
With the government having to subsidize domestic oil prices at a time
when Indonesia has become a net-oil importer, it is feared the upward
trend in oil prices will put more pressure on the budget and eventually
widen the deficit.
However, Achmad Rochjadi, the Finance Ministry's director general for
budgeting, says he does not think this will happen.
"It is unlikely to affect the budget deficit. In fact, we may
experience a surplus," Achmad said Thursday as quoted by Antara.
Achmad reasoned that higher oil prices would not only result in higher
expenditure, but also higher revenues. As a result, he said, the budget
deficit would not significantly affected.
"If our revenues from higher oil prices also increase, then the money
for subsidizing oil will be taken from there," he said.
Finance Minister Sri Mulyani Indrawati said the government would
continue to monitor the oil price situation.
"We will continue to monitor oil prices and how they affect state
revenue and expenditure," she said after a meeting Thursday with the
Regional Representatives Council (DPD).
The revised 2007 budget forecasts that the state revenue, including
grants, will amount to Rp 694.09 trillion (about US$73.84 billion)
while total expenditure will come in at Rp 752.37 trillion, giving a
deficit of Rp 58.285 trillion, or 1.5 percent of total GDP.
AFP reported Thursday that crude oil prices weakened in Asian trade
Thursday on profit-taking after reaching new peaks a day earlier on
concerns over tight U.S. supplies and hurricane worries.
"I think the profit-taking at this stage and some sell-off after the
record high is going to provide some prompt relief to the oil market,"
said Victor Shum, a Singapore-based analyst with energy consultancy
Purvin and Gertz.
Dealers also said that crude prices are expected to remain above $75
per barrel, supported by tight U.S. energy stocks and the Atlantic
hurricane season, where September is traditionally the peak month.
The government here is aiming to lower fuel subsidy spending from Rp
56.4 trillion in 2007 to Rp 46.7 trillion next year through, among
other things, the weaning away of consumers from kerosene for cooking
and its substitution with liquefied petroleum gas (LPG).
Sales of subsidized kerosene are expected to decrease from a total of
9.9 million kiloliters in 2007 to 8.6 million kiloliters next year.
State-owned oil firm PT Pertamina is hopeful that with many Indonesian
households switching to gas, the government can save up to Rp 25
trillion per year in fuel-subsidy spending.
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