Indonesia govt finalizing draft policy to ease fuel subsidy burden

Indonesia govt finalizing draft policy to ease fuel subsidy burden

President Susilo Bambang Yudhoyono. (ANTARA/Andika Wahyu)

"To me, compensating the poor for fuel price hike is a must."
Jakarta (ANTARA News) - President Susilo Bambang Yudhoyono said on Monday the government is finalizing a draft policy to ease the burden of fuel subsidy on the state budget.

"The option is still being discussed," the President said when opening the Ninth national congress of the Indonesian Businessmen Association (Apindo) here on Monday.

If the price of subsidized fuel is to be raised the price hike may lead to soaring inflation rate and increasing poverty rate, he said.

The President recalled when the price of subsidized fuel was twice raised in 2005 and once in 2008 the prices of goods and services soared. But when the price of subsidized fuel was lowered in 2008 the prices of goods and services remained unchanged.

"So the elasticity of the prices of goods and services to the prices of fuel oils is very low," he said.

He said if the price of subsidized fuel is to be raised, the government must compensate the poor for the fuel price hike. "To me, compensating the poor for fuel price hike is a must," he said.

Improving the fiscal condition should not burden the low-income people. Therefore, the funds obtained from the retrenchment of fuel subsidy should be allocated not only to infrastructure development but also to poverty eradication, he said.
(Uu.S012/F001)

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