Indonesia increased the price of fuel oil by about 30 percent. The country’s government has decided to rein in increasing subsidies despite the risk of nationwide protests. Reuters news.
Indonesia’s Energy Minister Arifin Tasrif said that the price of subsidized gasoline will increase from 7,650 rupiah (about 49 taka) to 10,000 rupiah (about 64 taka) on Saturday (September 3) from 2:30 p.m. local time (1:30 p.m. Bangladesh time). And the price of subsidized diesel will increase from 5 thousand 150 rupees (about 33 taka) to 6 thousand 800 rupees (about 44 taka).
Indonesian President Joko Widodo said the decision to raise fuel prices was difficult, but he had no choice but to do so.
In 2022, the subsidy budget nearly tripled from the actual budget to 502 trillion rupiah (US$3.4 billion) in Southeast Asia’s largest economy. This is being attributed to the rise in global fuel prices and depreciation of the rupee.
Indonesian Finance Minister Shri Mulani Indrawati said that despite increasing fuel prices domestically, more money will be needed depending on crude oil prices in the international market. He said, we are monitoring its impact on inflation and economic growth. If necessary, the government will provide cash to reduce the pressure on the poor.
Massive subsidies to the energy sector have so far helped keep inflation low in Indonesia. Because of this, the country’s central bank refrained from raising interest rates until last month. Last August, the inflation rate in the country was only 4.69 percent.
Fuel prices are a politically sensitive issue in Indonesia. Even the slightest change has a big impact on families and small businesses. Because more than 80 percent of state-owned oil company Pertamina’s total sales come from subsidized fuel.
The last fuel price hike in the country was in 2014. At the time, Joko Widodo raised the price of oil to cover the fiscal deficit months after taking power, sparking protests across the country.
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