Indonesian President Susilo Bambang Yudhoyono announced on Sunday the reduction of oil prices to protect the country's economy from the fallout of the global financial crisis.
The President made the decision after a Cabinet meeting on Sunday evening, following the ease of the global oil prices to nearly 40 dollars a barrel from a record of over 147 dollars a barrel on July 11.
The gasoline price would be cut by nine per cent to 5,000 rupiah (about 0.45 dollars) per litre and diesel oil by 13 per cent to 4,800 rupiah (some 0.43 dollars) per litre, said Coordinating Minister for Economy Sri Mulyani.
The new prices would kick off on December 15, according to the Minister.
The oil prices cut is expected to contribute to softening inflation pressure and trigger the country's central bank to cut its benchmark interest rate more aggressively.
At a press conference on Sunday evening, President Susilo said "The global economic turmoil has caused crude oil demand to decrease, and I have decided to reduce premium and gasoline prices."
Minister Mulyani said that the price cut was aimed at increasing purchasing power to spur business sectors.
"The price cut is expected to ease inflation by 0.3 to 0.5 per cent so that it could boost purchasing power," said Mulyani.
The Minister also said that the Government would review and make adjustment if the global oil prices keep at the low level.
"Oil price reduction may help cushion the fallout of the global economic crisis on the country's economic growth," she said.

The Minister said recently that Indonesia's economic growth would at the range of 4.5 and 6.0 per cent next year.
Indonesia's Central Bank unexpectedly cut interest rate by 25 basis points to 9.25 per cent on December 4 to boost real sector, following the threat of deepening impact of global financial crisis in the comings months.