Fuel Subsidies

Poverty and Inequality Analysis
Monitoring, Evaluation and Learning
Policy Research

For the past few months the position of fuel subsidies has been one of the most prominent issues in many discussions about the national economy as the Indonesian government considers the pros and cons of a signifi cant reduction or the complete removal of these measures. What will be the likely reaction of the wider community if these subsidies are removed? If there is a substantial rise in the price of fuel, what will be the social and economic impact-especially on the poor and the underprivileged within the community? What strategies can the government adopt to offset the negative effects?

This issue of our newsletter reports on several recent investigations by SMERU researchers which have direct relevance for these questions. Our data analysis group presents some interesting fi ndings about who actually benefi ts from the existing subsidy on the price of kerosene. We also report in some detail on several short-term government initiatives put in place late last year that were intended to assist poor households to cope with fuel price rises. Upon completion of the field investigations, the SMERU team prepared a memo for the relevant government departments and agencies involved, reporting on the main fi ndings from the study. These findings were also presented in early April at a SMERU public seminar which provoked lively discussion. Since this remains a topic of current concern - especially since the government has recently announced that it will increase fuel prices in mid June - we are confi dent that our readers will fi nd this edition a useful and timely introduction to some of the relevant issues.

Nuning Akhmadi
Research Topic 
fuel subsidies
Cash Transfer
funds program
government subsidies
Publication Type 
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