Indonesia to maintain power tariffs, fuel prices

JAKARTA: Indonesia plans to keep electricity tariffs and fuel prices unchanged this year and the next by hiking subsidies, two cabinet ministers and a senior official said, in a move aimed at increasing the purchasing power of its citizens.

Southeast Asia’s largest economy grew 5.07% in 2017, its best pace in four years, but consumption – the biggest contributor to the economy – has remained sluggish at around 5% from its pre-financial crisis era rate of 6%.

“The president understands that people’s purchasing power must be kept at its current level, if not increased,” Energy Minister Ignasius Jonan said on Monday.

The government will request parliament to approve the additional spending soon.

President Joko Widodo won international praise and credit rating upgrades for the country after some fuel subsidies were discarded in 2015. In the last few years, some electricity subsidies have also been phased out.

In 2017, the government spent 97.6 trillion rupiah (RM 26.8 billion) on energy subsidies, compared with 341.8 trillion rupiah in 2014. State spending on infrastructure has risen more than 80% to 376.1 trillion rupiah in the same period. The proposal to retain fuel and electricity prices at current levels will not disrupt budgetary reforms, Finance Minister Sri Mulyani Indrawati said yesterday. – Reuters