JAKARTA - The top priority of Indonesia's likely next government will be to cut fuel subsidies to control the country's widening budget deficit, a move it hopes to accomplish within the first 100 days in office, the vice presidential candidate said on Saturday.
Energy subsidies, which mainly benefit the rich, cost the government around US$20 billion (S$25 billion) a year and are the main factor behind a current account deficit that is expected to be above 3 per cent of gross domestic product this year. "There is no alternative. We have to reduce fuel subsidies,"Jusuf Kalla, the running mate of presidential frontrunner Joko"Jokowi" Widodo, told Reuters when asked what they would do in the first 100 days in office. "There is nothing you can do if 25 per cent of your budget goes to the middle class (through fuel subsidies). This is crazy."
Jokowi and Kalla are expected to be announced the winner of the July 9 presidential election when the Elections Commission concludes its nationwide vote count within the next few days. An official election result is expected to be announced by Tuesday.
Private groups tracking counting of the ballots show Jokowi ahead of ex-general Prabowo Subianto with around 53 per cent of the vote in the closest presidential election ever in the world's third largest democracy.
If confirmed the winner, Kalla said reducing fuel subsidies would be the new government's top economic priority once it takes office in late October.
Kalla said he was keenly aware of how politically sensitive it was to cut fuel subsidies in Southeast Asia's largest economy after hiking prices three times when he first served as vice president during the first term of outgoing president Susilo Bambang Yudhoyono. "From my experience, you will not spark any protests if you do it in good time and with good style," he said.
Protests over fuel price increases contributed to the downfall of the long-serving autocrat Suharto in 1998.
Kalla declined to say by how much it would initially reduce fuel subsidies.
Jokowi has previously said he would gradually reduce fuel subsidies over a four or five-year period.
Indonesian fuel prices are some of the cheapest in the world, currently priced at 6,500 rupiah a litre for gasoline and 5,500 for diesel. "Indonesia is one of the biggest socialist countries in the world when 25 per cent of its budget is going to only energy subsidies. Only Venezuela and Iran maybe have cheaper oil prices than Indonesia," Kalla said.