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3000 rupiah/litre fuel subsidy cut will save 21t rupiah in 2014: Indonesia fin minister

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Indonesia's finance minister says the new government's plan to raise fuel prices by nearly 50 per cent or 3,000 rupiah per litre in November will cut subsidy spending by 21 trillion rupiah ($US1.73 billion) for the 2014 state budget. -- PHOTO: BLOOMBERG

[Jakarta] Indonesia's finance minister says the new government's plan to raise fuel prices by nearly 50 per cent or 3,000 rupiah per litre in November will cut subsidy spending by 21 trillion rupiah ($US1.73 billion) for the 2014 state budget.

Finance Minister Chatib Basri also said the inflationary impact of the price hike would be managable, in line with a central bank statement earlier.

The 2014 state budget has 246.5 trillion rupiah allocated for fuel and gas subsidies, about 13 per cent of budgeted spending.

The 2014 state budget deficit is projected to increase due to a shortfall in tax revenue of as much as 75 trillion rupiah, potentially breaching the legal limit of 3 per cent of gross domestic product.

The deficit is budgeted at 2.4 per cent of GDP. REUTERS