18 Jun 2013

Fuel subsidies to be cut in Indonesia

11:30 am on 18 June 2013

Parliament in Indonesia has paved the way for a jump in petrol and diesel prices.

After a 12-hour session, parliament voted 65% in favour of a revised budget that includes cash compensation for the poor to help them cope with the higher fuel costs.

President Susilo Bambang Yudhoyono had demanded aid for the poor before he would approve the price rise.

The price rise will cut fuel subsidies, which last year amounted to $20 billion.

The ABC reports the revised budget sets aside about $910 million in cash compensation for more than 15 million families, which will be paid over four months.

Under the proposal, ordinary petrol prices would rise 44% and diesel by 22%.

The ministry of finance said the rises could save the country about $4 billion if they are implemented this month.