Indonesian President Susilo Bambang Yudhoyono yesterday defended his unpopular fuel price hike as necessary to avoid an economic meltdown similar to the 1997 Asian Financial Crisis.
Workers and student groups have attacked the government over the 28.7 percent average rise in the price of subsidized fuel which came into effect on Saturday despite widespread protests.
But Yudhoyono told a forum of regional investors the government had to act to save the budget from collapsing under the weight of runaway subsidy bills linked to soaring global oil prices.
“The decision on Friday to further reduce oil subsidies was the best, necessary and most responsible solution to save our national economy from crumbling and protect our people from harm,” Yudhoyono said.
“The alternative would be a possible financial and economic crash similar to that of 1997 and the real loser here would be our own people,” he said.
Analysts applauded the price rise, saying it was vital to prevent a deficit blowout and demonstrated the government’s fiscal responsibility despite the threat of protests leading up to general elections next April.
But critics say it puts an unacceptable burden on the poor who are already struggling to make ends meet after the recent surge in food prices.
The price rise has put intense political pressure on Yudhoyono, who has faced widespread public anger after his administration announced plans for the price increments earlier this month.
Rallies have taken place almost daily across the archipelago. Around 5,000 protesters gathered outside the presidential palace in Jakarta yesterday despite a strong police presence, police said.
Peaceful protests were also held on Java, Sumatra and Sulawesi, including a hunger strike by seven students in the city of Bandar Lampung, ElShinta news radio reported.
A group of lawyers also filed a class action lawsuit against Yudhoyono in a Jakarta court on behalf of “the people” claiming millions of dollars in compensation for the fuel price hike, news Web site Detikcom reported.
One of the lawyers said the president’s move had violated a constitutional guarantee that natural riches would be used for the material prosperity of Indonesians.