The Price Of Pertalite Doesn't Need To Rise, Economists Suggest The Government Use The State Budget Surplus To Fill Subsidies

JAKARTA - Director of the Center of Economics and Law Studies (Celios) Bhima Yudhistira said that the government should pay close attention to the increase in subsidized fuel prices, especially Pertalite. Instead of increasing Pertalite, Bhima suggested that the government use the state budget surplus to cover energy subsidies.

Bhima explained that in the midst of high world oil prices, the government is actually enjoying a surplus in the state budget (APBN) from commodity sales.

During January to July 2022, the absorption of new energy subsidies was Rp. 88.7 trillion based on data from our State Budget. Meanwhile, the state budget has a surplus of IDR 106.1 trillion or 0.57 percent of GDP in the July period.

"This means that the government also enjoys rising crude oil prices to boost state revenues. Why was the surplus not prioritized to cover energy subsidies?" he said he was contacted by VOI on Monday, August 29.

"There should be no indication that the government does not want to cut significantly the budget that is not urgent and sacrifices energy subsidies," he continued.

As a solution, according to Bhima, the government could revise the rules to stop the leakage of subsidized diesel enjoyed by large-scale industries, mining and large plantations.

"By covering the leakage of diesel fuel, we can save on subsidy spending because 93 percent of diesel consumption is subsidized. First, regulate the leakage of subsidized diesel in trucks that transport mining and palm products, rather than increasing prices and limiting Pertalite types," he explained.

Bhima said that if the government raises the price of subsidized fuel, the vulnerable middle class will also be affected. Previously they were still able to buy Pertamax fuel, but the increase in Pertamax prices made them switch to Pertalite.

"If the price of Pertalite also goes up, the middle class will sacrifice other spending. Those who were able to buy clothes, want to buy houses through mortgages, and set aside money to start new businesses are finally eroded to buy gasoline. What will be the impact? Demand for the manufacturing industry can be hit," he said.

In fact, said Bhima, labor absorption can also be disrupted. "And the government's economic recovery targets could be missed," he said.