Yudhoyono’s Spokesman Rules Out Immediate Fuel-Price Rise

Indonesia’s government has no immediate plan to raise fuel prices, a spokesman for President Susilo Bambang Yudhoyono said as the leader prepares to adjust the country’s subsidized fuel policy.

“I can assure there won’t be an increase in subsidized fuel prices in April,” Julian Aldrin Pasha, spokesman to the president, told reporters in Jakarta today. Yudhoyono has considered input from various parties, including a number of suggestions to boost fuel prices in the coming weeks, Pasha said.

The government is formulating a more targeted fuel-subsidy policy because the current one benefits middle to upper-income groups more than the poor, Yudhoyono said last week. The plan may be fleshed out in one to two weeks, and subsidies will be controlled and managed, he said then. Indonesia was weighing the benefits and disadvantages of raising prices or choosing another method, he said March 13.

Southeast Asia’s largest economy is under pressure to curb demand for oil imports, which have contributed to a record trade deficit in October and one of the worst-performing currencies in Asia in the past year. Reducing government payments to keep fuel prices low would also allow the president to allocate more of the state budget to infrastructure projects needed to lure investment and spur growth.

Indonesia’s 2013 budget deficit may be more than 2 percent of gross domestic product, exceeding the government’s target of 1.65 percent, Finance Minister Agus Martowardojo told reporters in Jakarta today. The bigger-than-target shortfall estimate is due to high subsidy costs, lower tax revenues and declining exports because of the global slowdown, he said.

Raising subsidized fuel prices is the last option for the government, Martowardojo said last week. The government may impose limits on the sale of subsidized fuel for privately owned vehicles, and the controls will probably be applied in five big cities, he said.

Yudhoyono’s scope to raise prices is narrowing ahead of elections in 2014. The country limited the use of partially government-funded diesel in January. The government has avoided raising fuel prices since protests derailed an increase early last year.

To contact the reporters on this story: Novrida Manurung in Jakarta at nmanurung@bloomberg.net; Agus Suhana at asuhana1@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net

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