Economy / Indonesia
Political Pressures May Preclude Further Fuel Price Hikes
July 2008 | Political Risk AlertIndonesian President Susilo Bambang Yudhoyono has urged parliament to work with the government to tackle the problem of soaring global oil prices, after the country's lower house on July 1 approved a committee to examine the president's May 24 decision to hike domestic fuel prices by an average 28.7%. Yudhoyono has cautioned that 'with oil prices at US$140 a barrel, [the government] will have to spend IDR205trn (US$22.2bn) on subsidies', and has also warned that IDR90trn (US$9.7bn) would be needed for electricity subsidies, suggesting that further fuel price hikes may well be in the offing. However, political pressures are now threatening to scupper any such plans.
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