World oil price to affect Indonesia`s economic growth

Nusa Dua, Bali (Antara News) - Finance Minister Sri Mulyani said the surge in the world oil price to US$80 per barrel will affect Indonesia`s economic growth although it showed a positive trend in the past year.

"This is indicated by the higher economic growth rates in the third and fourth quarters which reached five to six percent a year, and the increase in people`s purchasing power to above five percent, and the fact that exports have recorded a higher value. But we must stay alert about a possible rise in inflation and a decline in people`s purchasing power next year," she said here Thursday.

Speaking to the press on the sideline of a tree planting drive in Kecil Island (Nusa Dharma) during the UN conference on climate change, she said another factor that would affect the country`s economy was sluggish world economic growth in 2008.

The minister said the oil price hike would cause an increase in subsidy for premium gasoline, diesel oil and kerosene in the state budget.

Therefore, the government should manage its budget to minimize the impact of the world oil price hike.

Sri Mulyani said, management of the state budget should cover both production and consumption of oil.

On the one hand, oil production should be adjusted to the state budget assumption at 1.034 million barrels per day.

"Consumption must be adjusted to the state budget, and be kept at a maximum quantity for instance through the strategy of the kerosene-to-gas (LPG) conversion program," Sri Mulyani said.(*)
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