Mengwi – President Megawati Sukarnoputri yesterday defended her decision to raise fuel and power prices, arguing they were needed to end the country's reliance on foreign debt.

Protests have erupted across the nation over the past week, though they have been nothing like the wave of demonstrations over hikes in fuel prices that toppled the country's former president Suharto four years ago.

Some protesters have threatened bigger rallies and demanded Mrs Megawati's resignation if she refuses to roll back the price rises. No major rally took place during the weekend but hundreds of students staged a march to the centre of Solo in Central Java yesterday.

"I chose an unpopular but constructive policy for the long run, rather than opting for a populist step that may trouble us further," the President admitted, addressing tens of thousands of supporters of her Indonesian Democratic Party Struggle (PDI-P) at an anniversary commemoration in Bali.

"In the long run, we can reduce our foreign debt and no longer be tied up." She blamed past governments for the country's problematic foreign debt.

"The people have always been soothed by the lullaby of subsidies ... patching things with excessive exploitation of our natural resources and foreign loans," she said.

"It gained public support but destroyed our economic foundation. After 30 years placated by cheap prices, the hikes are indeed not easy to accept, but this is the best choice we have." She asked the people to stand behind her on this. "Indonesia, which is actually rich, can no longer conduct an economic policy which only relies on foreign assistance," she said.

"With all humility, I ask for the understanding of all PDI-P members and of the Indonesian nation, so that this choice to rebuild a stronger nation can be understood and supported, even though it is really difficult."

Earlier, 11 leading student groups called for more mass demonstrations today in a joint statement read out at the headquarters of the Muhammadiyah, the country's second-largest Islamic movement.

The government raised fuel prices by up to 22 per cent on January 2 in an attempt to reduce costly fuel subsidies and contain its budget deficit. Electricity and telephone charges were also raised on January 1. According to some estimates, the hikes could throw some three million Indonesians into poverty.

Indonesia said on Thursday that it may not seek a fresh loan programme with the International Monetary Fund when the current US$5-billion agreement expires later this year.

Jakarta has also announced a plan for six trillion rupiah in tax breaks to boost consumer spending in the wake of the price increases.