"There is no other way. Raising fuel prices is the easiest and fairest way," Kalla said here Wednesday.
Nevertheless, the fuel price increase would have to be offset by the government`s compensation, Kalla noted.
The government should distribute direct cash assistance (BLT) to the poor, to compensate for the increased fuel prices, he said.
"Direct cash assistance distribution is one of the most appropriate ways," he added.
Previously, the Ministry of Energy and Mineral Resources had proposed two options related to a reduction in the amount of fuel oil subsidies.
The first option is to raise the retail selling price of gasoline and diesel by Rp1.500 per liter.
The second option is that the government continue providing subsidies on fuel, with a maximum of Rp 2,000 per liter for gasoline and diesel fuel at retail prices.
Earlier, Indonesian economic analyst Aviliani predicted that the government`s policy to increase fuel prices would trigger the nation`s inflation to increase to 6.5 per cent in 2012.
"With the fuel price increase in the range of Rp1.500 to Rp2.000, the current price would also increase inflation to about one to two per cent, where the national inflation rate will automatically be raised to around 6.5 per cent," said Aviliani.
(Uu.A050/INE/F001)
Editor: Priyambodo RH
Copyright © ANTARA 2012
