Economists Predict That The Government Will Only Be Able To Provide Subsidies Until The End Of 2022, Fuel Will Increase Next Year

Illustration (Photo: Antara Doc)

JAKARTA - Inflation continues to be a global concern. The reason is, the spike in inflation triggered by Russia's invasion of Ukraine brought a domino effect on supply chains that are still disrupted due to the COVID-19 pandemic.

Indonesia's inflation itself is still maintained at 3.5 to 4.5 percent.

However, this figure will increase when the government removes subsidies for fuel oil (BBM).

Economist Aviliani predicts that in the current global uncertainty, the government will not be able to continue to provide fuel subsidies.

This is because the budget spent on BMM subsidies reaches Rp. 500 trillion.

Currently, continued Aviliani, the price of fuel is already above US$100 per barrel, and is even predicted to rise to US$150 per barrel.

According to Aviliani, this condition will push up domestic fuel prices.

"Now even if our inflation looks good, that's partly because the government subsidizes fuel. Try if there is no subsidized fuel, inflation will definitely rise. Now how far the government can subsidize fuel, I think it will be at the end of the year, next year it is impossible to subsidize continue with the BBM," he said during the discussion on the Release of the Indicator Survey, Monday, July 11.

Therefore, according to Aviliani, the government needs to explain to the public the current conditions in which inflation will occur. So that people can prepare themselves.

"So it means that people are brought to understand the conditions, because this condition has occurred in various parts of the world. America has already had 8 percent inflation, we can still maintain it from 3.5 to maybe 4.5 percent later. " he said.

In the current condition, Aviliani also reminded the government to provide subsidies to the public, not to goods. Because he thought it would be very dangerous.

"Because there will be a lot of people who are moral hazard. So if we look at the survey, most people want subsidies, they want BLT. So sometimes the survey is correct, but we have to explain that basically there is moral hazard behavior, people who don't deserve subsidies. want to be subsidized too. Well, this needs to be an explanation," he said.