Indonesia to cut fuel subsidy

Indonesia’s parliament has paved the way for a rise in petrol and diesel prices after months of debate and political haggling. The average 33% hike will reduce the government’s ballooning fuel subsidy which has been a major drain on resources. The move will likely stoke inflation and has sparked protests in recent days. The revised budget, passed late Monday, has a cash handout for poor families. A proposed increase of 33% in fuel prices last year led to violent demonstrations around the country. Opposition parties in parliament vehemently opposed a hike, despite economists saying a rise in fuel prices was critical for this country’s future. Although the decision to raise fuel prices and cut the subsidy bill will be applauded by the international investment community, Indonesians aren’t thrilled by the move.


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