Government forced into fuel price compromise
The government of President Susilo Bambang Yudhoyono failed to force through a fuel price rise on Friday which would have seen prices rise by more than 30% on Sunday.
Instead the 550 seat House of Representatives have agreed today to allow a price rise in six months time if the average Indonesian Crude Price (ICP) rises 15% above $105 per barrel to $120.75 pb.
Although lawmakers recognise that the government has to do something to keep the budget deficit below 3% in accordance with the law, many have been spooked by the mass protests against the rise across Indonesia, with as many as 90,000 turning out yesterday.
Finance Minister Agus Martowardojo will be forced to go back and see where he can make further savings or increase taxes elsewhere.