Indonesia mulls plan to raise fuel prices gradually

The National Development Planning Agency (Bappenas) of Indonesia has proposed a gradual increase in fuel prices to draw closer to international price levels and safeguard the state budget. Under the revised 2008 state budget, the government has allocated Rp135.1 trillion (US$14.42 billion) for fuel subsidies, about 13% of the total state expenditure of Rp987.48 trillion (US$105.45 billion). Bappenas said that with a monthly fuel price rise of 1%, inflation could be controlled and have fewer negative impacts than the latest increase or the October 2005 rise of an average 126%. The government provides a cash transfer program of Rp100,000 (US$10.68) per month to poor households to compensate for the latest fuel price increase. Along with other proposals, it could then form the basis of the country’s annual state budget. (June 7, 2008)