Indonesia may raise fuel prices sharply

International Business News  –  Indonesia may raise the price of subsidized fuel by 30 to 40 percent to cope with financial pressure from a rising subsidy budget, according to Singapore media reports.

Eddy, vice chairman of Indonesia’s parliamentary energy committee, said he was informed of the news during a closed-door meeting between parliament and Pertamina earlier this week.

Indonesia is Southeast Asia’s largest economy, and its energy subsidy quota for 2022 is already twice as high as its initial budget, at IDR502 trillion (about Rp232.3 billion), or about 16 percent of total spending, due to rising global oil prices and the devaluation of the rupiah, the report said.

Indonesia has indicated that it will have to allocate more money for subsidies this year if it does not raise fuel prices.

Eddy said, “We think this (raising prices and restricting sales) will have the least negative impact on people.” He revealed that the fuel price increase is expected to add about 1.9 percentage points to the inflation rate in 2022.

Indonesia’s inflation rate reportedly reached 4.94 percent in July, the highest level in seven years.