Assumptions on State Revenue from Increased ICP Prices

Economics & Macro

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Viva Budy Kusnandar 04/04/2022 14:10 WIB

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In the 2022 State Budget (APBN) sensitivity simulation to changes in basic macroeconomic assumptions, the government estimates that a US$1 per barrel increase in the Indonesian Crude Price (ICP) could

Sensitivity of the 2022 State Budget to a US$1 Increase in the ICP

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Assumptions on State Revenue from Increased ICP Prices

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Sensitivity of the 2022 State Budget to a US$1 Increase in the ICP

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Indonesia Crude Price (ICP), or Indonesian Crude Price, is one of the macroeconomic indicators that can affect the State Budget (APBN).

In the 2022 APBN, the government estimated the 2022 ICP to reach around US$63 per barrel, and an increase in its price could impact state finances.

According to the 2022 APBN sensitivity assumption, every US$1 increase in ICP per barrel could generate State Revenue of Rp3 trillion, consisting of Tax Revenue of Rp800 billion and Non-Tax State Revenue (PNBP) of Rp2.2 trillion.

A US$1 per barrel increase in ICP is also assumed to impact an increase in State Expenditure of Rp2.6 trillion, consisting of Central Government Expenditure of Rp1.9 trillion and Transfers to Regions and Village Funds (TKDD) of Rp800 billion.

Thus, cumulatively, every US$1 increase in the ICP price is assumed to generate a budget surplus of approximately Rp400 billion.

(Also Read: Highest Since 2014, Indonesian Crude Oil Price Set at US$95.72 Per Barrel)

Based on data from the Ministry of Energy and Mineral Resources (EDM), in February 2022, the ICP price was at US$95.72 per barrel.

This price has increased by approximately US$32 per barrel from the estimated ICP price in the 2022 APBN, which was only US$63 per barrel.

Using the sensitivity assumption in the 2022 APBN, this ICP increase has the potential to generate State Revenue of approximately Rp96 trillion, boost State Expenditure of Rp83 trillion, and leave a budget surplus of approximately Rp12 trillion.

However, these figures are still assumptions. Besides ICP, there are several other macroeconomic indicators that can affect the APBN, such as economic growth rate, inflation, the rupiah exchange rate, State Debt Securities (SUN), and oil and gas lifting capacity.

"In reality, changes in certain macroeconomic basic assumptions will have an influence and interact with changes in other macroeconomic basic assumptions, so that the final impact on the 2022 fiscal year APBN cannot be definitively determined," as quoted from Book II of the Financial Note and the 2022 Fiscal Year APBN.

(Also Read: Tax Revenue Soars, Realization of State Revenue Reaches Rp302.4 Trillion)

Editor : Adi Ahdiat

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."