Indonesian Cabinet to Halt Some Fuel Price Increases
Jakarta, Jan. 20 2003 (VOA News) -- The
Indonesian cabinet said it will rescind some price hikes
in fuel and electricity after facing weeks of angry
street protests. The move is likely to please public
opinion, but may be less popular with international
aid donors, who have long been pushing for the structural
reforms to the Indonesian economy.
The decision
to raise fuel and electricity prices on New Year's
Day sparked a series of anti-government demonstrations
across the Indonesian archipelago, and on Monday the
government partially caved in to public pressure.
The cabinet
said it would reverse the hikes in the price of diesel
oil and kerosene for industrial use. The move goes
some way to appease the concerns of the protesters,
who were worried that higher fuel costs would also
increase the price of public transportation, and that
businesses would have to lay off workers to recoup
their growing energy expenses.
But the
cabinet said that the price of gasoline and kerosene
for domestic use would continue to be heavily subsidized
but would not be cut.
Even during
the temporary price hikes, Indonesia still has some
of the cheapest fuel in the world. Monday's downward
adjustments mean domestic kerosene costs eight cents
a liter, industrial diesel 18 cents a liter, and gasoline
only 20 cents a liter.
The 22
percent rise in fuel prices imposed on New Year's
Day was part of a program mandated by the International
Monetary Fund to reduce debts and balance the budget.
The energy subsidies cost Indonesia $1.5 billion a
year.
Last week,
government ministers also canceled plans to raise
telephone rates.
International
aid donors are due to meet on the island of Bali Tuesday
to discuss Indonesia, and Monday's decision is not
likely to please the International Monetary Fund or
other major sources of assistance.
The government
has inherited a heavy legacy of debts and corruption
from decades of rule under former president, Suharto,
who was forced from office during massive demonstrations
against similar price hikes imposed in 1998.
-Tim
Johnston - Voice of America in Jakarta
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Reprinted with the permission of Voice of America
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