Economists Expect Inflation To Reach 6.5 Percent If Pertalite Prices Rise To IDR 10,000 Per Liter

JAKARTA - Director of the Center of Economic and Law Studies (Celios) Bhima Yudhistira Adhinegara estimates inflation this year will be at 6 to 6.5 percent year on year if the price of Pertalite rises from Rp. 7,650 per liter to Rp. 10,000 per liter.

"It is feared to be the highest inflation since September 2015," he told VOI, Thursday, August 18.

In addition, he said, the increase in Pertalite prices on the one hand would ease the burden on the state budget, but the government was obliged to increase social spending funds as compensation for the poor and vulnerable to the rising prices of subsidized fuel oil (BBM).

"So it's like saving money in the right pocket, but more money comes out in the left pocket," continued Bhima.

Bhima suggested, there are several things the government can do instead of increasing the price of Pertalite cs.

First, by tightening the supervision of Solar subsidies for transportation vehicles in large-scale mining and plantation companies.

So far, according to him, the level of diesel fuel leakage is still happening, and it is easier to supervise the distribution of diesel fuel compared to controlling fuel for private vehicles because the number of transportation is far less than private cars.

"Savings from supervising the distribution of subsidized diesel are enough to help save the budget," continued Bhima.

Second, the government must encourage the construction of gas lines to replace dependence on imports of 3 kilograms of LPG.

The gas network is also useful for narrowing the subsidy gap to well-off households.

"Third, postpone infrastructure projects and allocate funds to increase the allocation of energy subsidies. Then divert some of the PEN funds for energy subsidies," added Bhima.

Lastly, savings in personnel expenditures, goods and services expenditures, including transfers to regions can still be made.

"The government is also equipped with a financial emergency law in which the budget shifts without the approval of the DPR. So, the sooner a reshuffle of the state budget is carried out, the better," he concluded.

Previously, the Coordinating Minister for Economic Affairs Airlangga Hartarto opened his voice regarding the government's plan to increase the price of fuel oil (BBM).

Airlangga admitted that his party is currently reviewing the fuel price policy and the effects it will have if the government officially raises prices.

"The government is now conducting a review regarding the demand due to the increase in fuel prices, both in terms of volume and in terms of subsequent policies," he said at a Press Conference on the Financial Note and the 2023 State Budget Bill in Jakarta, Tuesday, August 16.

One of the things discussed was the possibility of an increase in inflation driven by the policy of raising fuel prices and its impact on Indonesia's economic growth.

The Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif said that the government is currently discussing a plan to increase the price of Pertalite fuel oil in response to the high world crude oil prices.

Arifin said the plan was already under discussion with the Coordinating Minister for the Economy Airlangga Hartarto.

"The price of Pertalite is still being discussed in coordination with Pak Airlangga," said Arifin to the media, Tuesday, August 16.