After a great deal of discussion and mixed signals, the Government of Indonesia has apparently resolved to increase the price of fuel in June to Rp. 6,5000 (US$0.65), an increase of Rp. 2,000 from the current price of Rp. 4,500 (US$0.45).
Diesel fuel will go up Rp. 1,000 to the new level of Rp. 5,500 (US$0.55).
The decision to go ahead with the long-expected price increase was announced by Indonesia’s newly appoint Finance Minister Chatib Basri, who still declined to specify an exact date in June when the price increase would take place.
The increase in fuel prices is widely seen as needed to reduce the financially crippling level of subsidization provided by the Government at the fuel pumps.
In exchange for eliminating a portion of the fuel subsidies the government has committed to spend Rp. 12.5 trillion (US$1.25 billion) on infrastructure projects, and education and poverty projects.
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