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Indonesia raises fuel prices by more than 30%

by ChemOrbis Editorial Team - content@chemorbis.com
  • 18/11/2014 (16:27)
According to media reports, Indonesia increased fuel prices by more than 30% in order to reduce the country’s energy subsidies and provide financing for development plans. With the recent price revision, the government aims to save approximately $8 billion next year.

On Monday, the country’s new president announced that the subsidized gasoline price was increased to 8,500 rupiah ($0.70) a liter from 6,500 rupiah while the diesel price climbed to 7,500 rupiah ($0.62) a liter from 5,500 rupiah. It was reported that any money saved from reduced subsidies will be spent for infrastructure, agriculture, education and health projects. After the increase in fuel prices, the country’s fiscal deficit is expected to contract.

Meanwhile, after the government increased fuel prices, the country’s central bank announced today that it raised its benchmark interest rate by 25 basis points to 7.75% in order to soften possible increases on inflation. The bank has increased the interest rate for the first time since November, 2013. The Bank held its overnight deposit facility rate unchanged at 5.75% while lending facility rate climbed 50 basis points to 8%.
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