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As fuel price hike imminent, Indonesia expands social aid program
Speaking at a public lecture in the S. Rajaratnam School of International Studies, Airlangga said that as the COVID-19 situation is improving and the economic activities starting to pick up pace, the government expects that it can pay more in subsidies as domestic fuel consumption soars.
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Coordinating Economic Minister Airlangga Hartarto (left) speaks during a public lecture at the National University of Singapore Society (NUSS) on Aug. 29, 2022. (The Jakarta Post/Office of Coordinating Economic Minister)
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oordinating Economic Minister Airlangga Hartarto said that as the government is set to announce the fuel price hike very soon, it will set up a financial aid scheme for the poverty-stricken as an effort to cushion the blow from the planned policy.
Speaking at a public lecture in the S. Rajaratnam School of International Studies, Airlangga said that as the COVID-19 situation is improving and economic activities are starting to pick up pace, the government expects that it would be difficult to pay more in subsidies as domestic fuel consumption soars.
"With COVID-19 set aside, we can expect the demand for fuel to increase, and with 55 percent of the Indonesian economy depending on people’s mobility [...] we are planning to adjust the prices," Airlangga told the audience on Monday evening.
Airlangga said that before the fuel price hike is announced, the government will put in place a social safety net to help the poverty-stricken who will be the most affected by the planned policy.
"Only when 40 percent [of the population] who need this support receives aid, then we adjust the price of fuel accordingly," Airlangga said.
The government may raise fuel prices from 30 percent to 40 percent to manage fiscal pressure from a ballooning subsidy budget.
At the public lecture Airlangga also said that Indonesia has spent more than US$30 billion in energy subsidies to absorb the shock from the increase in global oil price this year.
