Sign up | Log in



Home  >>   Daily News  >>   Indonesia  News  >>   Economy  >>   Delayed decisions on subsidies costs Indonesia
NEWS UPDATES Asean Affairs        24  March 2011

Delayed decisions on subsidies costs Indonesia

Related Stories

March 14, 2011
Indo businessmen worry over Japanese investment

March 11, 2011
Indo bank, IMF discuss capital inflows

March 2, 2011
Lower Indo food prices ease inflation

February 23, 2011
Indonesia to be the next BRIC

February 21, 2011
Experts weigh in on Indo economic policy

Pushing back plans to reduce subsidized fuel usage because of worries about rising inflation is risking the country's fiscal health, analysts say.

They are worried that placing politically popular actions ahead of difficult but necessary decisions will lead to ballooning budget deficits that will be hard to finance through the bond market.

Bambang Brodjonegoro, acting chief of the Fiscal Policy Office at the Finance Ministry, said on Tuesday that shelving plans to limit use of subsidized Premium fuel would increase fuel-subsidy spending by Rp 6 trillion ($690 million) this year. The government set aside Rp 95.8 trillion for fuel subsidies in its 2011 state budget and assumed crude oil prices of $80 per barrel.

Oil prices have topped $100 per barrel, though. According to Finance Ministry data, every $1 per barrel increase over oil price assumptions swells the budget deficit by Rp 800 billion.

Juniman, an economist from Bank International Indonesia, doubts the government can maintain a deficit of Rp 124.7 trillion, equal to 1.8 percent of the nation's gross domestic product. He also worries the bond market, in which the government does most of its deficit financing, may not absorb enough bonds.

"The deficit is definitely going to get bigger. If we estimate the average crude price is about $100 per barrel for the whole year, our deficit is going to soar by Rp 10 trillion," he said on Wednesday. The deficit could grow as large as 2 percent of GDP, he added.

Finance Minister Agus Martowardojo has played down deficit worries, saying a stronger rupiah would compensate for rising oil prices.

Even without soaring deficits, Juniman said, Indonesia still has cause for concern. According to the state budget, the government must issue Rp 200.6 trillion in bonds this year.

"Every week, we need to issue up to Rp 5 trillion in bonds. If we keep forcing high target issuance, it will send a signal the government needs money, but market sentiment is shaped by concerns over inflation. I'm afraid the market cannot absorb all the bonds we throw into the market," he said.

Overloading the bond market with Indonesian debt could force the government to offer higher yields, raising borrowing costs. "This is the cost for politically favorable decisions," Juniman said.

Reach Southeast Asia!
10- Nations, 560- Million Consumers
And $1 -Trillion Market
We are the Voice of Southeast Asia Media Kit
The only Media Dedicated to Southeast Asia Advertising Rates for Magazine
  Online Ad Rates

Comment on this Article. Send them to

Letters that do not contain full contact information cannot be published.
Letters become the property of AseanAffairs and may be republished in any format.
They typically run 150 words or less and may be edited
submit your comment in the box below




1.  Verifier

1. Verifier

For security purposes, we ask that you enter the security code that is shown in the graphic. Please enter the code exactly as it is shown in the graphic.
Your Code
Enter Code

Today's  Stories    24  March 2011 Subsribe Now !
 • Delayed decisions on subsidies costs Indonesia
Subcribe: Asean Affairs Global Magazine
• Indo ministry pushing IPOs Asean Affairs Premium
• Malaysian growth rate on target

• Sanctions against Myanmar seen as highly counterproductive

Research Reports
on Thailand 2007-2008

•Textiles and Garments Industry

•Coffee industry

•Leather and footwear industry

•Shrimp industry

• Philippine growth rate revised

• Bigger role for Ford in Thailand

• Japan trade drop

• Soco targets Vietnam for exploration
Asean Analysis    24   March 2011 Advertise Your Brand
• Common sense energy policy reaches Asean Sponsor Our Events
Asean Stock Watch    24  March 2011
• ASEAN Equity News‏
Global News Impacting Asia    17 November 2010
• Bank of America sees Asian inflation
• Lloyd’s increases insurance push in Malaysia
• Wells Fargo analyst on euro
• Obama’s visit to Asia

ASEAN NEWS UPDATES      Updated: 04 January 2011

• Women Shariah scholars see gender gap closing
• Bank Indonesia may hold key rate as inflation hits 7 percent

• Bursa Malaysia to revamp business rules
• Private property prices hit new high in Singapore
• Bangkok moves on mass transport
• Thai retailers are upbeat
• Rice exports likely to decline
• Vietnamese PM projects 10-year socioeconomic plan


This year in Thailand-what next?

04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More

Home | About Us | Contact Us | Special Feature | Features | News | Magazine | Events | TV | Press Release | Advertise With us

| Terms of Use | Site Map | Privacy Policy  | DISCLAIMER |

Version 5.0
Copyright © 2006-2020 TIME INTERNATIONAL MANAGEMENT ENTERPRISES CO., LTD. All rights reserved.
Bangkok, Thailand