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If Fuel Subsidy is Forced, it Will Shrink the Potential of the State Budget

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Main Expert Researcher at the BRIN’s Center for Behavioral and Circular Economics Research, Maxensius Tri Sambodo, believes that the government’s plan to reduce energy subsidies is correct. If subsidies are left unchecked, it will shrink the potential of the State Revenue and Expenditure Budget (APBN).

“The potential of the State Budget in allocating to increase the competitiveness of human resources (Human capital) will shrink,” said Maxensius in a dialogue with the theme “Adjusting Fuel Prices for Targeted Subsidies” on Elshinta radio, Friday (2/9/2022).

According to Maxensius, with the condition of high world crude oil prices, fuel subsidies will burden the state budget. He supports energy subsidies to be reallocated into the budget needed by the poor.

“So far, 80 percent of the fuel subsidy has only been enjoyed by the wealthy. Meanwhile, the lower economic class only enjoys 20 percent,” said Maxensius.

Such conditions, said Maxensius, did not create a dimension of fearness or social justice. In addition, efforts to save energy will also be difficult to realize.

“There is a macro construction that we have to read. The issue of rising fuel prices always occurs in line with demand and supply. The political economy dimension of the subsidy policy is like sugar, which makes us complacent,” he said.

Maxensius admits that the government is very aware that the policy of adjusting fuel prices is very political. Adjusting fuel prices is also not an easy choice for the government. Moreover, at this time the economy has not fully recovered.

“The fuel price adjustment also affects inflation. But it really depends on the increase made by the government,” he said.

He said, related to inflation due to fuel price adjustments, the government must pay attention to the fate of 20 percent of the people who are affected, especially in the distribution of social assistance. Groups that need attention include fishermen, online motorcycle taxis, and MSMEs. Because they will certainly be affected by fuel adjustments.

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