Indonesia govt asks parliament for $24 billion additional energy subsidies

JAKARTA : Indonesia's government has asked for parliamentary approval to top up energy subsidies by about $23.8 billion to be able to keep some energy prices unchanged amid a global surge in inflation, its finance minister said on Thursday.

Finance Minister Sri Mulyani Indrawati requested adding 74.9 trillion rupiah ($5.09 billion) to energy subsidies, taking them to 208.9 trillion rupiah for the whole of 2022.

The government also proposed ramping up compensation for state energy firm Pertamina and utility PLN by 275 trillion rupiah for some sales otherwise not covered by subsidies in 2022. That takes the total for 2022 to 293.5 trillion rupiah ($19.95 billion). Some compensation will be carried over to 2023.

Despite the subsidy increase, Sri Mulyani said the government is considering raising electricity tariffs for some household consumers with larger power capacity.

The changes assumed Indonesia crude oil price averages at $100 a barrel this year, compared with the original assumption of $63 a barrel.

The government is due to receive increased revenues thanks to high commodity prices, Sri Mulyani said, and under the new budget proposal, the deficit will be between 4.3 per cent-4.5 per cent of gross domestic product.

That was smaller than the 4.85 per cent of GDP budget gap estimate approved by parliament last year, but bigger than the 4 per cent deficit projection Sri Mulyani made in February.

Total spending under the revised budget, which is due for the committee's approval later on Thursday, will be 3,106 trillion rupiah, while total revenue is seen at 2,266 trillion rupiah.

The revised budget also takes into account 2022 inflation outlook of near 4 per cent, compared with an earlier projection of 3 per cent, a weaker rupiah exchange rate and higher government bond yields.

($1 = 14,715.0000 rupiah)

($1 = 14,715.0000 rupiah)