REPUBLIKA.CO.ID, JAKARTA -- Finance minister Chatib Basri has stated that the government has no plan yet to raise the price of subsidized fuel oils but the possibility is under consideration.

"It is still being exercised but we have no plan to raise the fuel prices after the legislative elections," he stressed here on Monday.

He added that the option to raise or adjust the subsidized fuel price will be taken depending upon the results of the study by the finance ministry's board of fiscal policy and economic conditions.

"I did not say that the fuel price will rise. But the possibility may not be ruled out. It all depends upon the results of the exercise," he explained.

Chatib pointed out that the government also did not have a discussion over fixed subsidy policy for the revised budget and future budgets, although the proposal to reduce the burden of subsidy spending had once emerged.

"This must be studied well. But if the rupiah keeps strengthening, reduction of subsidy spending through a fixed subsidy policy will not be much because the price of oils will also drop," he stated.

He explained that the implementation of the current energy subsidy did not as yet threaten the state budget because the rupiah exchange rate tended to keep appreciating, making the energy subsidy spending not altogether worrisome.

"If the exchange rate is appreciating, the subsidy spending will be smaller although the price of oils remains the same. We are still reviewing it," he reiterated.

The World Bank had earlier reminded about the importance of reform in the allocation of energy subsidy spending to make it more effective for those in need and reduce fiscal burden.

"The energy subsidy must instead be used to help the poor so that it will be more effective and will also reduce fiscal risks," World Bank economist Jim Brumby explained.

He remarked that the reform was needed because allocation of energy subsidy especially for fuel oils in 2014 will increase up to Rp267 trillion surpassing the ceiling set at Rp211 trillion.

"The decision to raise the fuel price last year was good because a gap has occurred again between rupiah depreciation and the increasing demand," he asserted.

He added that in all the excess of subsidy spending will affect budget deficit, which is expected to reach 2.6 percent of the Gross Domestic Product in 2014, or higher than the target set at 1.69 percent in the national budget.

"This will cause pressure on the Indonesian fiscal sector because state revenues are predicted to drop while energy subsidy spending tends to increase," he pointed out.

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