No hike in fuel prices in near future: Govt

No hike in fuel prices in near future: Govt

JAKARTA (JP): The government will not increase fuel prices
today, as outlined in the IMF-brokered reform package signed on
Jan. 15, and is likely to maintain fuel subsidies for some time
to curb the spiraling inflation rate and prevent possible social
unrest.

Minister of Finance Fuad Bawazier said yesterday that the
government would not raise fuel prices in the foreseeable future.

When asked whether prices would rise today, Fuad shook his
head and said: "No, no."

Ramli Djaafar, the spokesman for state oil and gas firm
Pertamina-- the sole distributor of fuel oil-- said the company
had thus far not been notified by the government about any
increase.

"I don't see any move indicating that the government is about
to announce an increase in fuel prices tonight (last night),"
Ramli told The Jakarta Post.

The government has usually announced raises in fuel prices at
midnight. The last time the government increased prices was in
January 1993.

Ramli, however, acknowledged that several gas stations were
flooded by motorists yesterday who feared a price hike was
imminent.

"We have anticipated this kind of situation, and we have
supplied enough gasoline to satisfy public demand."

A reliable government source provided assurances that the
government would maintain the current fuel subsidy for some time
because if it was lifted in a time of economic hardship it could
spark social chaos.

"The International Monetary Fund (IMF) understands this matter
very well as it has experiences of this kind from some
countries," the source said.

The government and IMF officials are currently renegotiating
the implementation of the agreed reform package, which the
government says is too tough, pointing to rising social unrest
since the deal was signed in January to replace another agreement
last October which the government also backed away from.

The IMF has signaled it could be flexible on the reforms,
which seek to abolish monopolies, subsidies and other restrictive
trade practices

Key among the reforms scheduled to be implemented today is the
gradual scrapping of fuel subsidies, which analysts have warned
could ultimately spur cumulative inflation this year to 50
percent.

The inflation rate for the first two months of this year has
reached almost 20 percent, the highest during the New Order
administration.

Under the revised 1998/1999 state budget, the government has
allocated Rp 7.45 trillion (US$875 million) for fuel oil
subsidies, assuming that oil prices would average $17 per barrel
for the fiscal year. (aly/jsk/rid)