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Indonesia’s economy has been talked up in recent weeks, especially since the release of 2011 gross domestic product growth numbers. Not many countries in the world can boast of 6.5 percent growth in these uncertain times and forecast even stronger growth this year.

To inject a dose of realism, the Finance Ministry has cut its growth forecast for this year from 6.7 percent to between 6.5 percent and 6.6 percent. It said the lower forecast better reflected ongoing global economic uncertainty in light of the euro zone debt crisis.

As Finance Minister Agus Martowardojo pointed out, all economies are interconnected and a sharp slowdown in Europe will affect Asian nations as well. It is thus better to err on the side of caution even if the country’s overall outlook is positive.

There is, however, a danger that the nation will get carried with the euphoria and not follow through with implementing policies that are critical to sustained long-term growth. The country is where it is today because of tough decisions taken in the past. It will progress if we continue on that path.

One such critical decision that must be taken sooner rather than later is cutting fuel subsidies, which drain the government’s budget year after year. This is a perfect opportunity to do so as the economy is healthy and per capita income is rising. The old excuse that the government must protect the poor by maintaining the subsidies is eroding fast.

There has been a growing chorus in the country, especially among the business community, for the government to raise fuel prices rather than limit the use of subsidized fuel as the preferred option to reducing the subsidy bill. The latest to lend its voice to the argument is the Indonesian Young Entrepreneurs Association (Hipmi) , which said the plan to convert vehicles to compressed natural gas would create confusion given the lack of preparedness.

By cutting its expenditure on fuel subsidies, the government can free up funds for more critical uses, such as improving infrastructure and upgrading the education system. Not only would improving these two areas benefit the lives of ordinary citizens, it would help the economy rise up the value chain.