Indonesia's energy subsidies to rise this year: Finance Minister

Jakarta (ANTARA) - Finance Minister Sri Mulyani Indrawati said on Monday that the energy subsidies in the State Budget (APBN) are expected to increase this year.

"Energy subsidies are expected to increase with several changing parameters, such as oil prices, oil lifting, and the exchange rate," she explained during a session of the Budget Committee of the House of Representatives (DPR) in Jakarta.

So far, the government has spent Rp155.7 trillion (around US$9.57 billion) on energy subsidies and compensation, including 7.16 million kiloliters of fuel subsidies and 3.36 million kilograms of liquefied petroleum gas subsidies.

Indrawati noted that spending on energy subsidies and compensation increased due to the rupiah's depreciation, pushing up state expenditure. State expenditure in the first half of 2024 rose by 11.3 percent year on year to reach Rp1,398 trillion (around US$85.98 billion).

The community still enjoys subsidized prices that are relatively stable despite the changes in parameters, she said.

"As a result, the APBN must bear the burden," Indrawati added.

The Ministry of Finance previously announced that the provision of energy subsidies in 2024 was higher compared to 2021, that is, before crude oil prices soared. It has also been influenced by movements in the rupiah exchange rate and the distribution volume. However, the Indonesian crude price (ICP) is still said to be within the predicted range in the state budget.

Baca juga: 1,938 km toll roads built in decade using state budget: govt
Baca juga: Deforestation success evidence of effective fund management: Minister

"There has been not much pressure in terms of ICP. However, in terms of the exchange rate, pressure is starting to show for the subsidies," said Isa Rachmatarwata, the ministry's Director General of Budget, in June.

He added that the ministry will continue to monitor the movement of oil prices to determine the provision of subsidies. The government will keep coordinating with the DPR in making decisions about the subsidies so that they can be kept flexible.