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Indonesia might raise gas prices the week after next - minister

Image: Reuters Berita 24 English - Luhut Pandjaitan , a senior minister in Indonesia, said on Friday that the country's president may ra...

Image: Reuters

Berita 24 English - Luhut Pandjaitan, a senior minister in Indonesia, said on Friday that the country's president may raise the price of fuel next week to save money on energy subsidies.

The biggest economy in Southeast Asia has tripled its energy subsidy budget for 2022 to 502 trillion rupiah ($33.82 billion). This is because oil prices are going up and the rupiah is falling in value.

President Joko Widodo said earlier this week that he was thinking about raising prices. This came after Finance Minister Sri Mulyani Indrawati said that if fuel prices stayed the same until the end of the year, more money would likely be needed.

During a public lecture at a university in the city of Makassar, South Sulawesi, he said, "Maybe next week the president will announce about the matter of raising (fuel) prices." He also said that his ministry had made an economic model to see how the measure would affect inflation.

Due to rising food prices, Indonesia's inflation rate hit a seven-year high of 4.94 percent in July. The president has said that inflation might have gone up even more if the government hadn't kept fuel prices and some power tariffs the same.

Indonesians pay 7,650 rupiah per litre (about 52 U.S. cents) for subsidized gasoline, which is about 40% less than the estimated market price. Diesel costs 5,150 rupiah per litre (about 35 U.S. cents), which is about a third of the market price.

Bank Indonesia is going to look at its monetary policy on Monday and Tuesday. The governor of the bank has said that heavy subsidies give the central bank room to not tighten money too quickly.

($1 = 14,845.0000 rupiah)

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