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Govt will raise subsidy to shield people from inflation: Sri Mulyani
Finance Minister Sri Mulyani Indrawati is ready to increase budget spending to protect consumers – and economic recovery – amid surging inflation.
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Finance Minister Sri Mulyani Indrawati leaves the venue after the closing of the Group of 20 finance ministers and central bank governors meeting in Jakarta on Feb. 18, 2022. (AFP/Risyal Hidayat)
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inance Minister Sri Mulyani Indrawati is ready to increase budget spending to protect consumers – and Indonesia's economic recovery – amid surging inflation.
She conceded that energy subsidies were perhaps “not the best option” because the poor may not enjoy the benefits as much as the middle to upper class, but said political considerations needed to be taken into account as well.
“The [question] is actually [whether it is worth] the political and social upheaval at this very moment, especially after two-and-a-half years in a very, very dire situation,” Sri Mulyani told The Jakarta Post in an interview on Friday.
The minister ruled out for now another option previously considered by the government, namely to pass high energy input prices on to consumers and businesses through a hike in government-mandated energy prices.
Asked whether domestic energy price hikes were completely off the table, she said this would depend on how high oil prices might go.
Unlike some other emerging economies, Indonesia had the “fiscal space” to cushion Indonesians from the impacts of high global prices, the minister explained, referring to export revenue that allows the government to use state budget funds as an inflation shock absorber.
“I think this is more a political choice. So, it's not a technocratic choice in that we can always choose. There is always a calculation in terms of the price of each policy,” she added.
