Students and workers shout anti-government slogans during a demonstration against oil price hikes
JAKARTA — The Indonesian government's decision to hike the price of fuel by around 30 percent last week was necessary to tackle poverty and inflation, a minister said Thursday.
Information minister Mohammad Nuh defended the price rise amid nearly daily protests across the country and accusations that a cash transfer scheme aimed at softening the impact of the rise was not going to those in need.
The price rise was necessary to save Indonesia's economy from the swelling cost of its multibillion dollars subsidy scheme on the back of soaring global oil prices, Nuh told reporters here.
"If the government didn't do anything, inflation would have doubled to 13.2 percent from an earlier estimate of 6.5 percent for 2008... and the poverty rate would have increased to 15 percent," Nuh said.
Nuh said the price rise would still mean a spike in inflation to around 11.2 percent this year, but inflation would drop to 5.6 percent in 2009.
The rupiah would remain stable at around 9,000 to the dollar, Nuh said.
Nuh said that a 14.18 trillion rupiah (1.53 billion dollar) cash transfer scheme to 19.1 million poor families was reaching those in need, despite reports that some poor families were being overlooked while relatively rich Indonesians received aid.
Indonesian President Susilo Bambang Yudhoyono hiked fuel prices by an average of 28.7 percent on Saturday to limit damage to the budget from soaring world oil prices.
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