State-owned electricity firm Perusahaan Listrik Negara (PLN) plans to revoke the subsidy for customers of 900 volt-amperes (VA) electricity. The company has not yet decided the scale of the price increases but it is predicted the hike will affect 22 million customers.

“We recorded month-to-month inflation in June as standing at 0.66 percent while in the first week of July, inflation was at 1.2 percent. Ceteris paribus, the inflation rate will be below 4 percent at the end of the year. But if the electricity price increases, it will be 4.3 percent,” BI governor Agus Martowardoyo told journalists after attending a hearing at the House of Representatives in Senayan, Central Jakarta, on Monday.

In such a situation, the central bank chief said, it was the electricity price hike that posed the most direct challenge to Indonesia’s economic growth this year as global pressures have slowly faded. Moreover, Brexit’s short term impacts have been handled well, he added.

“The UK has appointed a new Prime Minister, Theresa May, and the global bond market has been cooling down although we are still aware of the possible long term impacts [from Brexit],” Agus said.

Earlier, BI revised its economic growth forecast for the end of this year from 5.09 to 5.53 percent as the government began its tax amnesty program. (ebf)

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