Indonesian President Joko Widodo on Saturday raised some fuel prices by around 30% to contain ballooning spending on energy subsidies in Southeast Asia's biggest economy.
The move risks sparking protests and further fanning price pressures, though analysts saw a need to act to ensure fiscal discipline.Indonesia raised the price of its most popular 90-octane gasoline, known as Pertalite, to 10,000 rupiah per litre, up from 7,650 rupiah. The finance ministry said state energy firm Pertamina's production costs for this type of fuel was 14,450 rupiah per litre.
Some economists have said raising fuel prices this year would reduce the risk of spending overruns in 2023 when the government must lower its fiscal deficit to below 3% of GDP.Fuel prices are a politically sensitive issue in Indonesia and with subsidised fuels making up more than 80% of Pertamina's sales, the changes will have major implications for households and small businesses.
Bank Indonesia raised interest rates on Aug. 23 for the first time since 2018 in a move analysts said was to pave the way for the fuel price hike announcement. BI is still well behind most peers in its roll back of pandemic-era stimulus and economists expect more hikes.
Indonesia Berita Terbaru, Indonesia Berita utama
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