Indonesia considers options to reduce fuel subsidy

Indonesia is studying the possibility of raising fuel prices in June by an average of 28.7% in response to skyrocketing fuel subsidies, which many fear may undermine the state budget. Finance Minister Sri Mulyani Indrawati and Energy and Mineral Resources Minister Purnomo Yusgiantoro acknowledged the proposal, saying it was one of the government’s options to address the growing fuel subsidies. We will look at all the scenarios to help the state budget, and at the same time reduce negative impacts on the public,” Mulyani told the newspaper. President Susilo Bambang Yudhoyono is under pressure from the business community to raise fuel prices in a bid to ensure fiscal sustainability. Analysts fear that if fiscal sustainability is not ensured, it could endanger the country’s sovereignty, which would eventually make overseas lending expensive and foreign-direct investment riskier. (May 1, 2008)