With such a condition, BI governor Agus Martowardojo warned the government to be careful in deciding the ideal time for raising the electricity price. He further said the central bank and the government would discuss inflation, one of the pressing issues, including tax amnesty, the country was facing at a roundtable policy dialogue they would jointly hold soon.

"I predict the electricity price hike will contribute around 0.8 to 1.1 percent to Indonesia’s inflation in 2017. But, in general, it will be still be in line with our inflation target of between 3 to 5 percent," Agus said in Jakarta on Friday.

He further explained that BI predicted the country’s inflation rate would stand at around 3-5 percent next year, in which inflationary pressures on volatile food and inflation of administered prices would become two major things the government should pay attention to.  

"I already discussed with the government that there should be coordination between BI and the government in deciding the right time to adjust the [electricity] price. Price adjustment is ideally conducted when the inflation is low that it would not impact the national inflation," he went on.

After the electricity price adjustment, users of 900 VA electricity would pay Rp 1,400 (10.72 US cents) per kilowatt per hour (kwh), more than twice of the current subsidized rate of Rp 604 per kwh.

The government argued that only 4.1 million out of 22.9 million 900 VA customers deserved to get electricity subsidies. (ebf)

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