REPUBLIKA.CO.ID, JAKARTA - Indonesia's new government is rethinking the timing and size of a fuel subsidy cut aimed at improving its finances, after a sharp drop in global oil prices reduced the cost of subsidising petrol and diesel in Southeast Asia's biggest economy.

Economists say falling oil prices give Asian governments an opportunity to trim or even end fuel subsidies, freeing funds for use in infrastructure projects or healthcare programs. President Joko "Jokowi" Widodo was poised this month to raise fuel prices by as much as 3,000 rupiah (0.25 USD) per litre, but a 7 percent decline in US crude prices since his Oct. 20 inauguration has eased the pressure to act quickly.

Jokowi, who took office on Oct. 20, has promised to confront a ballooning $23 billion fuel subsidy bill, the main factor behind the budget and current account deficits.

"How much the hike will be is the crucial part, especially since there has been a decrease in the global oil price. That is why the price is still being discussed," Husain Abdullah, spokesman for Vice President Jusuf Kalla, said on Thursday.

Indonesia's subsidized fuel prices are among the cheapest in the world with petrol costing 6,500 rupiah a litre and diesel 5,500 IDR. Jokowi's government has been considering a fuel price hike of 2,000 to 3,000 IDR.

"If we follow the trend, it should be this month. But we don't know for sure, there are other considerations to decide on a precise date," Abdullah said.

Widodo is expected to discuss the fuel subsidy issue with Kalla and his cabinet after he returns next week from attending the G20 summit in Australia. Raising fuel prices is a sensitive issue that typically sparks protests and contributed to the downfall of long-serving autocrat and then president Suharto in 1998. Protests, which remain largely peaceful, have been staged on a regular basis in Jakarta and other major cities ahead of the expected announcement.

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