Anggito Abimanyu, former head of financial and fiscal affairs of the finance ministry, said the government should increase fuel oil prices soon because of external factors that could cause economic troubles.
In fact, he said it would create worse conditions if fuel prices are not raised.
"The government should raise the price of fuel oil immediately because there is a strong external factor that necessitates it to do so," Anggito said.
He added that if the government did not increase the price of fuel oil, the public would subsequently feel a worse impact because the price level will be higher if raised later.
Anggito, who is a lecturer at Yogyakarta-based Gajah Mada University, said the needed price increase per liter of gasoline is Rp1,000.
"The Rp1,000 per liter is the proper price. If petrol is raised more than that it can trigger inflation," he said, adding that Indonesia often experienced a deflation in May, so it would be correct to raise the price in May.
The price should be raised soon, or in May 2012 at the latest.
"If the government is late and raises it in June or July, it has the potential to trigger inflation, since during this period the inflation rate is usually high because it is the beginning of the academic year and is a holiday period for students," he said.
He noted that if gasoline is raised by Rp1,000 per liter, inflation could be maintained at about 0.4-0.6 percent. But if it is raised in June, it will push up inflation to about one percent.(*)
Editor: Ruslan Burhani
Copyright © ANTARA 2012
