Friday, May 23, 2008


JAKARTA - Indonesians woke Thursday to the prospect of sharply higher fuel bills after the government said it would hike subsidised fuel prices by nearly 30 percent to rein in the budget deficit.

The government set the figure on the upper limit of expectations late Wednesday despite widespread protests against the move ahead of elections next year.

The hike is designed to limit the impact of record world oil prices, which are blowing out the government's multi-billion-dollar fuel subsidy scheme and sucking state money out of social programmes.

"The figure is relatively final, it will be 28.7 percent," Finance Minister Sri Mulyani was quoted as saying on the state-run Antara news agency.

It was the first time a senior minister has put a figure on the price hikes, which have sparked almost daily protests since the government announced its intention to slash fuel subsidies earlier this month.

She did not say when the new price regime would be implemented, only that it would not be introduced until the government had finalised a package of measures designed to offset the impact on the poor.

A 28.7-percent rise would see the cost of premium gasoline in Southeast Asia's biggest economy climb to 5,790 rupiah (RM 2.30) a litre from the current price 4,500 rupiah(RM 1.80).

President Susilo Bambang Yudhoyono says the move is essential to rein in the budget deficit and free up funds for spending on social programmes and the country's crumbling infrastructure….CNA

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