President-elect Joko Widodo will sit down with Indonesia’s outgoing leader next week in the hope of reaching an agreement to raise fuel prices before the handover in October, a move that would help ease budget-sapping subsidy costs.
The Constitutional Court on Thursday gave Widodo the green light to lead Southeast Asia’s largest economy from its worst slowdown since the global financial crisis. The court, as expected, unanimously upheld last month’s presidential election result, rejecting a last-ditch attempt by losing candidate Prabowo Subianto to force a re-vote. Widodo will begin his five-year term on Oct. 20.
Indonesia markets responded positively to the ruling on Friday. The rupiah and Indonesian government bonds rallied, while stocks hit a near 15-month high before turning negative.
With the legal hurdles out of the way, the 53-year-old Widodo is expected to step down soon as Jakarta governor to focus more on the transition.
Atop Widodo’s agenda is to address a ballooning fuel subsidy bill that is eating up on an already tight budget and threatening investor confidence by widening the current account deficit.
“I need spending space,” Widodo told reporters on Friday. “If we can do (the price hike) now, it will be a lighter burden.” A presidential spokesman said outgoing President Susilo Bambang Yudhoyono would meet with his successor next week.
Widodo and Yudhoyono have already held private talks about an increase in fuel prices.
