Although the hike might lead to inflation, Agus hailed the government`s decision, saying that the inflationary impact of the hike would be felt only in the first three months after the announcement.
Bandung, West Java (ANTARA News) - Bank Indonesia is preparing itself for possible inflation risks after the government confirmed its decision to raise the prices of subsidized fuel oils, governor Agus Martowadojo said.

"Bank Indonesia is fully prepared to respond and cooperate with the government to face the situation," he stated here on Tuesday.

Although the hike might lead to inflation, Agus hailed the governments decision, saying that the inflationary impact of the hike would be felt only in the first three months after the announcement.

"If the subsidy reform is carried out well, and sustainably, we will no longer need to discuss the issue every year," he noted.

BI deputy governor Perry Warjiyo, meanwhile, remarked that he and regional inflation control teams had prepared a number of steps to anticipate inflation following the hike of subsidized fuel prices.

He hoped the resultant hike in city transportation fares would be within an appropriate range.

"Last year, the hike in city transportation fares was better controlled. The fare hike was restricted to no more than 30 percent so that the second round effect was managed well," he added.

According to Perry, other measures included securing food and energy supply. "Generally, when fuel price hike happens, food prices will also increase due to speculative activities," he explained.

Vice-President Jusuf Kalla has confirmed that the hike of the prices of subsidized fuel oils will be announced this month. However, no decision has been made yet regarding the date of the hike.

Energy minister Sudirman Said stated President Joko Widodo would personally make the announcement regarding the hike.

"So, we have to wait for the President to return home," he noted while visiting the office of the director general for oil and gas.

President Joko Widodo is currently in China to attend the Asia-Pacific Economic Cooperation (APEC) Summit. He will then fly to Myanmar for the ASEAN Summit and later to Australia for the G20 Summit. He is scheduled to return home on November 16.

The President has decided to shift the subsidy on fuel to sectors that are considered more productive such as education, health, and infrastructure. The move will lead to increase in the prices of subsidized fuel oils.

Sudirman, meanwhile, urged consumers to abstain from hoarding fuel oils and re-selling it after the hike.

He also called on the people not to panic as the state-owned oil and gas company Pertamina has assured adequate supply.

The minister emphasized he will continue to coordinate with Pertamina to prepare for the hike.

He stated that the government would not impose a limit on the purchase of subsidized oils, adding that Pertamina had guaranteed sufficient stocks of subsidized gasoline and diesel fuel for the next 16 to 18 days.(*)

Editor: Heru Purwanto
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