Indonesian Coordinating Minister for Economy Hatta Rajasa said on Tuesday that the country budget deficit was likely to widen to 2.2 percent of the GDP from the initial target of 1.5 percent of the GDP due to soaring global oil prices.
The rising global oil prices has led the net oil importer country, Indonesia, which provides huge oil subsidy, face more pressure on its state budget. "Our budget deficit (this year) may reach 2.2 percent," Minister Hatta said at his office.
The debt crisis in Europe has trimmed exports from emerging Asia that the countries taken steps to shield economic growth from the weakening.
The Southeast Asia largest economy aimed to expand its economic growth at between 6.3 percent to 6.7 percent this year after accelerating at the highest since 1996 to 6.5 percent last year, according to the central bank.
The government plans to increase oil prices or ban private car from consuming subsidized fuel on April 1, the move that is expected to accelerate inflation to more than 5.5 percent, the bank governor Darmin Nasution has said recently.
Indonesia has increased budget for fuel subsidy in 2012 by 10 percent to 124 trillion rupiah (some 13.78 billion U.S. dollar) for fuel subsidy in 2012.
Indonesia's budget deficit stood at 1.27 percent of the GDP last year.
Indonesia had more rooms on monetary and fiscal sectors compared to Asian peers, on monetary side, the central bank still had more opportunity for further rate cuts and so did at fiscal side, at the deficit was still low, Nasution has said.
The central bank on Feb. 9 unexpectedly cut its basic rate by 25 basis points to 5.75 percent to protect growth as inflation outlooks eased. The bank previously cut the rate by 75 basis points in Oct. and Nov. to 6 basis points before it pause cut in Dec.and Jan.
The government has also prepared a possible financial stimulus package to spur growth.