Govt to raise fuel price

Vice president Jusuf Kalla said Wednesday the government will experience "problems" if it does not raise fuel prices before the year's end.

The government hiked prices by nearly 30 percent in March to reduce the impact of fuel subsidies on the budget, and another increase would be hugely unpopular.

It would also go against President Susilo Bambang Yudhoyono's public assurances that existing prices would be maintained through 2005.

"We can't wait to hike fuel prices later than January, because it could cause us more problems," Vice President Jusuf Kalla said, without elaborating.

His announcement reflects the impact of surging global crude oil prices hovering at around US$60 a barrel, dwindling domestic oil output, and strong demand.

Fuel subsidies cost the government around US$7.4 billion in 2004, or 3 percent of gross domestic product.

Kalla would not say how large the price increase should be, saying the government and parliament would first have to review this year's budget. (dino)