MINISTER of Energy and Mineral Resources (ESDM) Arifin Tasrif said the escalation of conflict in the Middle East might affect world oil prices. Likewise with energy subsidies and domestic fuel prices. However, Arifin said the government might still hold back price increases until June 2024.
As reported, many countries are monitoring developments in the Middle East following Iran launched explosive drones and missiles at Israel. This was Israel’s retaliation attack on their embassy compound in Syria two weeks ago.
“If US$1 (oil price) rises, there is a balance between PNBP (Non-Tax State Revenue) income and subsidy and compensation expenditure, so if it is the same as fuel, the increase is extraordinary,” said Arifin following a limited meeting regarding the global geopolitical situation led by President Joko Widodo (Jokowi) at the Indonesian Presidential Palace Complex in Jakarta, Tuesday (16/4). Also present were Coordinating Minister for Economic Affairs Airlangga Hartarto, Minister of Foreign Affairs Retno Marsudi, Deputy Minister of Finance Suahasil Nazara.
“Now we hold it, while the stock is safe,” added Arifin.
The government, he said, would look at further developments. It is hoped that an escalation of the conflict between Iran and Israel will not occur. Arifin explained,
Every increase in the price of oil per US$ 1, will have an impact on increasing subsidies and compensation for domestic fuel by around IDR 3.5 – IDR 4 trillion.
Also read: Economists remind the government to be careful in fiscal management
“Not to mention that every time the rupiah increases by US$ 1, Rp. 100 is also quite large. That’s why we have to save energy, this energy efficiency must continue to be implemented and programmed,” he explained.
Arifin admitted that it was difficult for the government to prevent fuel subsidies from increasing. President Joko Widodo or Jokowi, explained Arifin, gave directions to look at various possible scenarios and take alternative measures to reduce the spike in subsidies.
“We have to anticipate this by looking at possible scenarios, taking alternatives to reduce it,” said Arifin. (Z-10)
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