State Budget Increasingly Comes Under Pressure

Jakarta (Antara Bali) - The 2012 state budget will increasingly come under pressure from soaring fuel subsidy due to a rise in global crude price, an economist said.

"With the global crude price reaching US$126 a barrel, the fuel subsidy may soar to Rp238 trillion," Ikhsan Modjo of Brawijaya University in Malang, East Java, said on Sunday.

He expressed hope the House of Representatives (DPR)'s budgetary board which was discussing fuel oil policy with the government would be able to find the best solution to the soaring fuel subsidy.

At a working meeting with the Budgetary Board in the past couple of days, Finance Minister Agus Martowardoyo proposed a fuel subsidy of Rp138 trillion with the price of subsidized fuel oils increasing Rp1,500 to Rp6,000 a liter effective April 1, 2012.

Members of the budgetary  board were divided over the government's proposal. The meeting to discuss the amount of fuel subsidy is expected to resume on Sunday evening.(IGT)