Hatta: Govt still able to manage finances despite rising oil price

JAKARTA - Coordinating minister for economic affairs Hatta Rajasa said that the government was still able to manage state finances although crude prices have already passed budget assumptions.

"We have been helped by the appreciation of the rupiah exchange rate," he said here on Monday.

Oil observer Kurtubi said world crude oil price could reach US$200 per barrel if conflicts in the Middle East expanded to Saudi Arabia.

"If Saudi Arabia has the same fate as Libya it is not impossible that world crude oil prices could soar to US$200 per barrel. However if the conflicts did not spread to Saudi the price could possibly reach only between US$95 and US$125 per barrel," he said.

The world crude oi prices have now reached above US$100 per barrel after conflicts in Egypt and now spread to Libya. The Middle East countries produce around 30 percent of the world's oil.

Until now Saudi Arabia produces up to nine million barrels a day while Libya under normal circumstances produces 1.6 million barrels a day.

Minister Hatta Rajasa did not agree with Kurtubi saying it was impossible for the price to go up above US%200 per barrel.

"It would not go up as high as that because if that happens all activities will stop. The world also does not want to see the price to go up as high as that," he said.

He said the world would have troubles if the crude price reached US$200 per barrel.

The finance ministry admitted that the crude price had gone up because of the conflicts in the Middle East.

The ministry`s acting head of fiscal policy, Bambang Brodjonegoro, said the hike had also made the Indonesian Crude Price (ICP) to rise from averagely US$100.21 per barrel by the end of February 2011 to US$104.48 per barrel in the middle of March.

"This is the average price for the past three months while what would be used by the government for setting the assumptions for the revised budget is the annual average. We are estimating it would be between US$90 and US$100 per barrel," he said.

The government has set the assumed price of oil for the 2010 national budget at US$80 per barrel. The government has the authority to adjust the price of subsidized oil fuels if the domestic crude price reaches 10 percent above the assumption.

source : waspada.co.id