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akarta Governor Joko '€œJokowi'€ Widodo, the strongest contender in the upcoming presidential election, said he would gradually remove the costly fuel subsidy should he be elected president.

He underlined the importance for the next government to fully eliminate fuel subsidies in order to ease pressure on the state budget, taking a different standpoint to the Indonesian Democratic Party of Struggle (PDI-P) which, during its 10-year stint as an opposition party, has consistently rejected any moves by the government to hike the prices of subsidized fuel

'€œIn four years, the fuel subsidy should be eliminated gradually, step by step, until it'€™s gone,'€ Jokowi told reporters on the sidelines of the 2014 National Development Planning Conference (Musrenbangnas) on Wednesday.

Jokowi made the statement when asked by reporters of his opinion over Finance Minister Chatib Basri'€™s plan to implement a fixed-market based subsidy scheme: A fuel policy that would allow the government to adjust fuel prices in line with the fluctuation of oil prices in the world market.

At present, a rise in the price of oil affects the amount of subsidy the government has to disburse, as the price of subsidized fuel is fixed. With this policy, the fuel subsidy has always exceeded the limit.

The next government '€œmust be bold'€ to cut fuel subsidy, he said. '€œNevertheless, [a cut in fuel subsidy] should be implemented on the condition that the subsidy should be transferred to those in need, such as farmers or fisherman,'€ he added.

Presidential aspirants from Prabowo Subianto, Aburizal Bakrie to Hatta Rajasa have already stressed the need for Indonesia to put fuel subsidy funds to more productive use, but so far none have promised the complete elimination of it.

The fuel subsidy remains a politically sensitive issue in Indonesia, a former oil-exporting country that has been used to cheap fuel for decades. Any plan to adjust the price of subsidized gasoline has been marred by protests.

But, international observers have highlighted the need for Indonesia to cut its subsidy spending, which they criticized as poorly-targeted as it is mostly enjoyed by the upper middle-class.

According to the 2014 state budget, the government earmarked Rp 210.73 trillion (US$18.22 billion) for fuel subsidy this year: Higher than the Rp 206 trillion allocated for capital expenditure (capex), which comprises funds for infrastructure-related spending.

Indonesia'€™s fuel subsidy contributes to the country'€™s '€œinflexible'€ fiscal policy, as it consumes 27 percent of total spending, international rating agency Standard & Poor'€™s (S&P) said in its report released this week.

S&P presented a clear signal it could give Indonesia investment grade status if the government resolved the issue.

'€œWe may raise the rating if the next government'€™s policies, such as subsidy reform, would reduce Indonesia'€™s fiscal vulnerabilities,'€ S&P said in a statement.

During the Musrenbangnas, both fiscal and monetary authorities agreed that further reforms in fuel subsidy should be seen as priority for the next government. A move to adjust subsidized fuel would allow the new government to have ample fiscal space to boost growth, Chatib said while acknowledging that the fuel subsidy issue would be the biggest risk for the state budget next year.

Meanwhile, Bank Indonesia (BI) Governor Agus Martowardojo said that a complete elimination of fuel subsidy would help the monetary authorities push down the current-account deficit and drive up economic growth in the long-run.