Heavy State Budget Burden To Add Subsidy, Options To Increase Fuel Prices Are Becoming Increasingly Popular

JAKARTA – The government, through the Coordinating Ministry for Economic Affairs, delivered the latest news regarding the stock of subsidized/compensated fuel oil (BBM) which is now almost over the quota limit.

Through the Secretary of the Coordinating Ministry for the Economy, Susiwijono Moegiarso, the agency led by Airlangga Hartarto gave a statement. According to Susi, the condition of the 2022 State Revenue and Expenditure Budget (APBN) is almost certain that it will not provide additional volume II subsidies following the first disbursement which was already quite large.

He said the value of the compensation subsidy provided by the government this year reached more than Rp500 trillion. This figure is far from the normal amount which is in the range of Rp. 100 trillion per year.

“The DPR has decided on subsidies (the first addition) of IDR 502 trillion. The current price increase makes the state budget even more difficult,” he said in Jakarta on Monday, August 15.

Susi added that the current price of fuel oil according to market mechanisms has reached Rp. 17,000. In fact, he continued, the value that is still enjoyed by the community is currently only Rp. 7,000.

"This is far. So now it is being calculated how many options to increase the price, "he said.

However, Susi is reluctant to specify what type of fuel will be subject to price renewal in the future, considering the issue of fuel oil is quite sensitive and closely related to other economic sectors.

"If it has to go up, the government must calculate the ideal value because it doesn't want to burden the community so that it can maintain purchasing power," he said.

In the previous VOI report, a strong signal of an increase in fuel prices was issued from the Director General of Budget at the Ministry of Finance, Isa Rachmatawarta.

In fact, Isa explained that the implementation of the new fuel price would be accompanied by a social assistance distribution scheme (bansos) as a cushion for the community's economy. "Yes, that's one of the possibilities for using the additional Rp18.6 trillion in social assistance budget (when the subsidized fuel price adjustment is made)," Isa told VOI last weekend.