Indonesia not to hike fuel price in H2 even if oil averages $150/b

Indonesia is not going to hike subsidised fuel prices again this year even if the country’s crude oil price averages at $150 a barrel for the rest of the year, Bisnis Indonesia reported, citing Finance Minister Sri Mulyani Indrawati.

Last month the government hiked fuel prices by an average of nearly 30 percent to cap a rising fuel subsidy as oil repeatedly hit fresh records.
According to the revised budget approved by the parliament in April, the government can spend no more than 135 trillion rupiah for fuel subsidy this year from the original forecast of 45.8 trillion rupiah. Fuel subsidy alone accounts for nearly 14 percent of government spending this year.

The budget revision assumes the Indonesian crude price (ICP) will average at $95 per barrel against the original assumption of $60.

The ICP is about $5 less than the global oil price.

‘If the ICP averages at $150 per barrel in June to December, the budget will remain sustainable and the budget deficit will stay below 2.1 percent of GDP,’ Indrawati was quoted as saying.

Forbes