Indonesian president raises subsidized fuel price by over 30 percent

Reuters News
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Posted: Nov 17, 2014 9:51 AM

JAKARTA (Reuters) - Indonesia's president raised the price of subsidized gasoline and diesel by more than 30 percent on Monday, a move that could save Southeast Asia's biggest economy 100 trillion rupiah next year.

Joko Widodo, who became Indonesia's seventh president on Oct. 20, raised the price of gasoline and diesel by 2,000 rupiah ($0.16) per liter. Gasoline previously cost 6,500 rupiah a liter, and diesel 5,500 rupiah.

Finance Minister Bambang Brodjonegoro added that he expected inflation to rise 2 percent to 7.3 percent this year after the fuel price rise.

Although a highly unpopular step, Widodo has to urgently address Indonesia's biggest fiscal problem - a $23 billion fuel subsidy bill that is the main driver behind the country's twin budget and current account deficits.

(1 US dollar = 12,202.0000 rupiah)

(Reporting by Jakarta bureau; Writing by Michael Taylor)