Jakarta – The Indonesian energy subsidy is estimated to reach Rp 127.7 trillion (US$10.22 billion) this year, or 0.2 percent from gross domestic product (GDP), due to increasing global oil prices.
Last year, the government spent Rp 97.6 trillion on energy subsidies, or 108.7 percent from the amount allocated in the 2017 state budget, which was Rp 89.9 trillion.
Standard Chartered Bank Indonesia chief economist Aldian Taloputra said the increase in the energy subsidy projection was due to the increasing global oil price, which was currently at $70 per barrel, much higher than the government's projection of $48 per barrel in the state budget.
The government has announced that it would not increase the subsidized fuel prices until March. Aldian said the swelling amount of the energy subsidy would widen the state budget deficit to 2.6 percent of GDP from 2.2 percent of the government projection.
"The oil price increase will cause the deficit figure exceeding the government target," Aldian said in the global research briefing 2018 Global Outlook in Jakarta on Monday.
He said the government's decision to join countries in the Automatic Exchange of Information (AEOI) was expected to help increase the tax revenue in 2018, particularly from taxes of Indonesians who kept their wealth abroad.
"The transparency due to the AEOI is expected to become an instrument for the government to collect more tax revenue. We still see the shortfall, but it can be controlled between 2.5 to 2.6 percent," he added as reported by kompas.com. (bbn)