Indonesian Economy Susceptible To Oil Price Hikes

Jakarta (Antara Bali) - The Indonesian economy is considerably susceptible to world oil price hikes both in the macroeconomic and fiscal sectors, an official said.

House of Representatives budgetary board member Ecky Awal Mucharam said here on Friday that the government must be careful in stepping into year 2012.

"The external risk not only came from the decreasing value of exports from the weakening European market's purchasing power, but also from oil price hikes after the escalating tension between Iran and the US," he said.

Drastic world oil price hikes would cause a direct impact on Indonesia's national budget plan due to increases in the burden of energy subsidies.

Besides, the inflation will also increase from the 2012 government policy to stop private car subsidy fuel consumption.

"Last year's pride on being the lowest inflation in Asia Pacific was artificial, because it is supported by hundreds of trillions of energy subsidies. Let's not be complacent because it is vulnerable to higher oil prices," he said.

According to Ecky oil price hikes cannot be controlled by the government, but only ensure that oil lifting target and control the consumption of subsidized fuel can be done with discipline, so that the impact of rising oil prices to the state budget and inflation can be minimized.

"Last year's oil lifting was only 898 thousand barrels per day, very far from the target. The government must work hard this year," he said.

Moreover, Indonesia's crude oil prices (ICP) was in the range of 110 dollars per barrel, still way be above the budget assumption for 2012 of only 90 dollars per barrel.(IGT)