REPUBLIKA.CO.ID, NUSA DUA -- International Monetary Fund (IMF) proposed Indonesian government to implement a fixed fuel subsidy with special allocation. This is assessed as the best solution to avoid uncertainty in fiscal policy.

IMF Senior Resident Representative in Indonesia, Benedict Bingham explained that macroeconomic stability was important to encourage economic growth in medium and long term. Role of fiscal policy is very important as monetary tightening, such as the high inflation and current account deficit.

"Unfortunately, role of fiscal policy is not in line with the high of energy subsidies, especially fuel subsidy," Bingham said.

Fuel subsidy has an impact on budget inefficiency. With this new system, government space to control budget will be better and uncertainty in macroeconomic policy can be avoided.

Head of Macroeconomic Policies Fiscal Policy Office (BKF) Luky Alfirman said that a fixed fuel subsidy was one option to control allocation of subsidies. However, he still cannot ensure its enforcement in state budget.

"It is the decision of the leader," Alfirman said.

Directorate General of Treasury in Ministry of Finance projected that realization of fuel subsidy in 2013 in revised state budget would exceed 12 percent, from 199.9 trillion IDR to 223.88 trillion IDR. There are three main factors that trigger the excess of fuel subsidy, namely the weakening of IDR against USD, the increase in Indonesian Crude Price (ICP) and the volume of consumption.

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