A street vendor sells fuel in a plastic containers in Samarinda,
East Kalimantan on March 24, 2013. (Reuters Photo)
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The
Indonesian government is poised to distribute up to Rp 14 trillion ($1.4
billion) in aid to the poor ahead of the central government’s planned fuel
price hike.
The central
government is trying to ween Indonesian motorists off the nation’s costly fuel
subsidies — which cost the state some Rp 211.9 trillion in 2012 and heavily
favor middle class drivers. President Susilo Bambang Yudhoyono has issued
instructions which require the government to simultaneously slash fuel
subsidies and increase welfare spending.
This round
of payouts will reach some 15.5 million households living on less than $2 a
day, Coordinating Minister of Welfare Agung Laksono said. Additional spending
in the form of school aid and subsidized rice will be handed out as the fuel
subsidy cuts take effect, Agung explained.
The
coordinating minister said the government must spend some of the savings on the
nation’s poor.
“The
potential budget savings [from subsidy cuts] is up to Rp 37 trillion,” he said.
“It must be returned to the poor people through compensation programs and also
infrastructure development.”
Previous
efforts to raise the price of subsidized fuel sparked days of chaotic protests.
The plan was scuttled by Golkar Party and Prosperous Justice Party (PKS)
factions in the House as protests peaked in Jakarta.
Critics of
the plan argue that higher fuel prices will hurt the poor by causing food
prices to rise. But the government spends more on energy subsidies than it
spends on either education or health care.
The
government has floated raising the price of premium subsidized fuel from Rp
4,500 per liter to Rp 6,000. The price hike is expected to take effect next
month.
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