Don’t worry! The government will not eliminate subsidies this year!
According to a message from Finance Minister Tengku Zafrul, the government has the resources to deal with price pressure and therefore will not choose to reduce subsidies this year. The public need not worry that the government will remove subsidies for gasoline and electricity within this year.
Zafrul noted that the country’s debt to gross domestic product (GDP) ratio is 60 percent, so the country still has the fiscal space to meet the challenges posed by price pressures. The country is recovering from the epidemic, with GDP growth of 5 percent in the first quarter and likely to be even stronger in the second quarter.
The government assumed an oil price of $66 per barrel when it formulated the budget, while the price of Brent crude today is around $100 per barrel or less.
Earlier, the deputy secretary of the Ministry of Finance noted that the new gasoline allowance mechanism may be issued to eligible people through e-wallets. However, the government still needs three months to review the results of the experiment. The government must ensure that the new gasoline allowance mechanism will not cause problems for the people when it is implemented nationwide. Because e-wallets may be common in urban areas, but not in rural areas, and older people may not have e-wallets.
The Ministry of Finance believes that a cash allowance for the target group is not a good idea either, as some low-income groups are engaged in transportation or food delivery services and consume a lot of gasoline each month. The government’s cash allowance is clearly unable to meet the expenses of these operators.
