Government Prepares to Redirect Rp24.17 Trillion in Fuel Subsidy Funds to Social Assistance Programs

Finance Minister Sri Mulyani announced that the government is reallocating Rp 24.17 trillion (approximately US$1.6 billion based on the exchange rate at the time of writing, but this should be verified against the current exchange rate) in fuel subsidy funds to increase social assistance (bansos) for the public. This reallocation of fuel subsidies to social assistance is planned to be implemented this week.

The reallocation of fuel subsidies will be in the form of:

* Direct cash assistance (BLT) of Rp 600,000 per recipient for 20.65 million recipients, totaling Rp 12.4 trillion.
* Wage subsidy assistance of Rp 600,000 for 16 million workers with salaries below Rp 3.5 million per month, totaling Rp 9.6 trillion.
* The government is also allocating 2% of general transfer funds, worth Rp 2.17 trillion, to assist the transportation sector, including public transportation, motorcycle taxis (ojek), and fishermen.

This assistance will be paid using 2% of general transfer funds, namely from the general allocation fund (DAU) and the revenue sharing fund (DBH), amounting to Rp 2.17 trillion to assist the transportation sector.

For information, in the 2022 State Budget (APBN), the government allocated a subsidy budget of Rp 152.5 trillion. However, due to the increase in global oil prices, the weakening of the rupiah exchange rate, and the increase in the volume of subsidized fuel, the subsidy budget has swelled to Rp 502.4 trillion.

If the prices of subsidized fuel and LPG gas are not increased, the subsidy budget could swell to Rp 698 trillion by the end of the year. That much money would be wasted and go up in smoke.