Wednesday, April 16, 2014

Economist: SBY Could Cut Fuel Subsidies

Senior Economist at Standard Chartered Bank Ichsan rate, it's good the government is currently completing his homework beforehand , so the new government could focus on infrastructure projects .

One of the homework that must be completed is about subsidizing fuel oil ( BBM ) . He said that if the fuel subsidy is not trimmed , there is a risk the state budget deficit ( the budget ) will exceed 3 percent of Gross Domestic Product ( GDP ) .

" If the House agrees , ( pruning ) can be done SBY , the new government could also be done in October or November, " said Fauzi , in Jakarta , Wednesday ( 16/04/2014 ) .

He added that , if done Susilo Bambang Yudhoyono ( SBY ) , he predicted that August is the month right . The reason , in the pattern of lower inflation , thus cutting fuel subsidies do not make the prices too volatile .

Fauzi was optimistic the House would approve the discourse Ministry of Finance ( MoF ) to lock in the subsidy of Rp 2,000 - Rp 2,500 per liter . That is , the economic price of oil , currently at USD 11,000 , the premium price adjusted at Rp 8,500 or Rp 9,000 per liter .

"If the discourse terealiasi , automatic domestic oil prices will fluctuate with international oil prices , but with a spread or margin is set, " he said .

According to him , the discourse is very likely approved by the House . The reason , the budget deficit should be kept at a ratio of 3 percent of GDP is a legal reason . "If it is exceeded , the President , the government , and Parliament , can be blamed . So it is very likely the House approved . , But returned again in the end that determines the increased fuel prices is the president , " said Fauzi .
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"The president could just say" Oh well not raised fuel prices , canceled construction projects aja " , " he added .


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