Today, The Indonesian
government is dealing with a crucial problem in budgeting. The government allocates large
energy subsidy in 2013. The energy subsidy is defined as a sum of money granted
by government to aid person or group for reducing fuel price in the market. The
subsidy, which is a part of the Indonesian budget, should be prudently granted.
Firstly, the huge subsidy can risk the Indonesian economic. By 2013, the energy subsidy based on Indonesia budget attains IDR 247 trillion. It means that the subsidy is approximately 24% of Indonesian expenditure. On the other hand, the global price of petroleum increases significantly. By assuming that the domestic demand of petroleum is stable, the subsidy would skyrocket because of the global price of petroleum. Moreover, if the subsidy rises significantly, the budget structure will change too. Consequently, some productive expenditures may be reduced or the new debt may be ballooning. For example, when petroleum price climbs too high, productive expenditure, such as development of infrastructures will be cut. In addition, the new debt containing interest will burden the budget.
Furthermore, the energy subsidy may not achieve its main purpose which is managing inflation. However, about 70% of the subsidy is used by individual and household, while the remaining is used by manufacturing and public transportation. As a result, the subsidy will not achieve main goal because most of subsidy is used by individual, instead of the productive sector such as manufacture and business.
In conclusion, the Indonesian government has to manage the energy subsidy carefully because the large subsidy may harm Indonesian economy and it may miss the main goal which is managing inflation. The government should reduce the amount of subsidy because the global price of petroleum increases significantly during 2013.
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*lagi belajar menulis single sided essay :D
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