TEMPO.CO, Jakarta - President Joko "Jokowi" Widodo will announce an increase in the prices of subsidized fuel oil next week, Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Panjaitan stated today.

The decision to increase the price of Pertalite and Solar, he explained, is made because the government had given a huge subsidy for energy so it weighed heavily on the State Budget or APBN.

“Maybe next week, the President will announce this price increase,” Luhut said at Hasanuddin University, Makassar, as broadcasted via YouTube on Friday, August 19, 2022.

According to him, the President has indicated that the government is unlikely to maintain the number of energy subsidies as fuel prices in the country are the cheapest in the world. “Our fuel prices are much cheaper than others, and that is a huge burden on our state budget,” he emphasized.

The government has previously signaled a surge in subsidized fuel prices. The signal strengthened after the budget for energy subsidies and compensation swelled to Rp502 trillion.

Economist Bhima Yudhistira estimated the price of Pertalite would jump from Rp7,650 to Rp10,000 per liter. Consequently, the 2022 inflation could reach 6-6.5 percent year-on-year.

The Director of the Center of Economic and Law Studies (Celios) opined that the hike in fuel prices would directly affect the community, such as the decline in people's purchasing power which may lead to a rising number of poor people. “Because people are now facing rising food prices, with inflation approaching five percent,” Bhima told Tempo on Wednesday, August 17, 2022.

RIANI SANUSI PUTRI | HENDARTYO HANGGI

Click here to get the latest news updates from Tempo on Google News