AMED, INDONESIA (REUTERS, AFP) - A Balinese town once bustling with holidaymakers has almost emptied of tourists after warnings that nearby Mount Agung could erupt at any time - a snapshot of the growing cost the rumbling volcano poses to Indonesia's economy.

Business has slumped at many hotels, dive resorts and restaurants in towns around the volcano since authorities issue the highest alert level for Mount Agung, about 75km from the resort hub of Kuta, on Sept 22, telling people not to venture within 9km to 12km of the summit.

An owner of a dive centre in Amed, around 15km (9 miles) from the volcano and just outside the official "danger zone", said many of her guests had cancelled.

"If (the situation) lasts for nine months or more... then we have no choice but to close down because we will have no money left to operate and pay the staff," said Helene Rabate, a Spaniard who runs the centre.

Cafes and restaurants were largely empty and few visitors were seen at the usually crowded dive centres of this seaside town.

The last time Agung erupted was in 1963, when more than 1,000 people were killed. Since then, tourism has transformed towns like Amed from sleepy fishing and agricultural villages. Restaurant owner Wayan Widarti has seen a dramatic drop in customers.

"It could be worse than when the Bali bombing happened because there's uncertainty on when (the eruption) is going to happen and how long we wait," she said, referring to the 2002 nightclub bombing that killed 202 people and prompted a slump in visitors to the holiday island.

Bali, famous for its surf, beaches and temples, attracted nearly 5 million visitors last year - more than half the total number of foreign tourists to Indonesia. Tourism, a cornerstone of Bali's economy, is Indonesia's fourth-biggest earner of foreign currency after natural resources like coal and palm oil.

Indonesian policy makers have been seeking to boost an economy whose growth rate has been stuck at around 5 per cent for the last few years, so any protracted damage to tourism will be particularly unwelcome.

Indonesian officials have said Bali remains safe for tourism, but there have been cancellations even in areas further away from the volcano amid concerns that ash clouds could disrupt air connections. Some tourists are still in the area at a safe distance from the volcano.

"We plan to... just follow security instructions... and take a fast boat to escape if there is an eruption," said Arlin Shiu, a woman from Hong Kong who was travelling with a friend.

TOO SCARED TO GO HOME

Disaster management authorities have imposed an exclusion zone of up to 12km, prompting some 144,000 residents to flee to neighbouring villages, including about 75,000 who were not in immediate danger. "For people who live in safe zones, there is no reason to evacuate," Bali governor I Made Mangku Pastika said, adding that makeshift evacuation centres were straining under the weight of thousands of extra evacuees.

Thousands of residents who fled the rumbling volcano are refusing to leave evacuation centres after being told to return to their homes outside of the immediate danger zone.

"Honestly I don't have the courage to go home right now because my children are still young, our house is located in a narrow alley, I don't know if we will have enough time to evacuate (if the volcano erupts)," mother Cecilia Eka Setyarini Utami, who fled to an evacuation centre in Denpasar, told AFP.

Kadek Kanda, the coordinator of an evacuation centre in Bali's capital Denpasar, said his shelter was so full he had stopped accepting evacuees.

"Some people whose houses are not within the danger zone have started to return home this morning, but for those who decided to stay, we don't have the heart to tell them to go home."

Indonesia's Centre for Volcanology and Geological Hazard Mitigation said the number of volcanic tremors was still high - 222 between midnight and 6am Monday - but the situation was stable.

"You have acceleration prior to Sept 22. At that moment we increased the alert level, but thereafter the number of seismicity is almost the same day by day," said Devy Kamil, a senior official at the centre, told AFP.

White steam clouds - which contain sulphurous fumes - have been observed rising 50 to 200 metres above the summit.

Indonesia sits on the Pacific "Ring of Fire" where tectonic plates collide, causing frequent seismic and volcanic activity.

In 2010, Mount Merapi on the island of Java erupted after rumbling since 2006, while Mount Sinabung on Sumatra island - which is currently also on the highest alert level - has been active since 2013.

Volcanologists cannot predict when an eruption may occur, but Kamil said the risk had not decreased.