Government to raise subsidized fuel prices

The government confirmed Monday it will raise its subsidized fuel prices to protect the state budget from the soaring price of oil.

"We will raise the subsidized fuel price within the limits which people can afford. We're now working on that and we'll announce it to the public later," Coordinating Minister for the Economy Boediono told reporters.

He did not indicate the size of the price hikes.

The government will also go ahead with programs to lower demand for electricity and fuel using so-called smart cards and control cards, and will optimize the collection of funds generated from taxes and other areas, as well as cut some spending, Boediono said.

President Susilo Bambang Yudhoyono said earlier Monday that the question was no longer whether prices would be raised, but by how much.

"We are not at the stage of talking about whether to raise it or not, but which commodities should be increased and whether it will be 20, 25 or 30 percent ...," he said.

Fuel subsidies this year are projected to nearly triple to Rp 126.8 trillion (US$13.8 billion), or about 12 percent of the state budget, based on a revised oil price of $95 per barrel. (godang)