Govt seeks to increase fuel prices Q1

Government may increase fuel prices next month by an average of 30 percent as it tries to cut subsidies and meet a budget deficit target this year, Chairperson of National Development Planning Sri Mulyani said on Thursday as quoted by Bloomberg.

The government may seek House approval for the increase, Mulyani told reporters after a Cabinet meeting in Jakarta. The size of the rise will depend on its timing, crude oil prices, the country's budget deficit and finances, she said.

"The later the increase, the less money we save," Mulyani said. "The crude oil price is above US$40 a barrel now, while our assumption is still at $24 a barrel."

The country set a budget deficit target of Rp 17.4 trillion ($1.9 billion) this year, based on a crude oil price of $24 a barrel.

Indonesia spent a total of Rp 69 trillion ($7.5 billion) on fuel subsidies last year, more than its initial target of Rp 59.2 trillion. The subsidies, which reduce funds available for government development spending, cover kerosene for cooking and gasoline and diesel. The country plans to spend Rp 25 trillion this year on subsidies. (*)