UPDATE 1-Indonesia c.bank sees no price risks from power hike

Published: 11 Mar 2010 22:53:59 PST

JAKARTA, March 12 - Indonesia's plan to hike electricity prices by 15 percent by July will have limited impact on inflation, the senior deputy governor of the central bank said on Friday.

"The planned electricity price hike will have limited impact, so we don't see any problem with the plan," Darmin Nasution said.

Finance Minister Sri Mulyani Indrawati on Monday released a revised 2010 budget, which will need parliamentary approval before it takes effect.

As well as proposing a 15 percent hike in electricity tariffs by July, the new budget also revised up the inflation forecast to 5.7 percent from 5 percent and increased spending on subsidies by almost a quarter. [ID:JAK510408]

The central bank said on Thursday that inflation would remain contained in the first half of 2010, despite stronger economic growth seen this year.

Bank Indonesia revised up its 2010 economic growth forecast to 5.5-6.0 percent, up from 5.0-5.5 percent, deputy governor Hartadi Sarwono said. [ID:JAK144209].

The central bank last week kept its key interest rate <BIPG> on hold at a record low of 6.5 percent and said it would keep it there this year if inflation remains within a target of 4-6 percent. Many analysts still expect that rates will rise by the end of the third quarter as inflation builds. [ID:nJAK398776]

Southeast Asia's biggest economy grew 4.5 percent in 2009, down from 6.1 percent growth a year earlier.