Indonesia’s Finance Minister Purbaya Yudhi Sadewa announced that the government intends to keep subsidized fuel prices unchanged through the end of 2026. This commitment comes despite an increase in global oil prices, which have been influenced by escalating tensions involving the United States, Israel, and Iran.
During a meeting with Commission XI of the House of Representatives (DPR) in Jakarta on Monday, Minister Sadewa stated that this stability is projected on the assumption that global oil prices average around US$100 per barrel. He also clarified that prices for non-subsidized fuel varieties, which do not receive government subsidies, would continue to fluctuate in response to market dynamics.
The Finance Ministry has developed contingency plans and evaluated the state budget’s resilience under various oil price scenarios, including those at US$80 and US$100 per barrel. Sadewa indicated that the government possesses additional funding mechanisms to absorb the impact of higher oil prices, complementing the regular state budget.
These mechanisms include the Excess Budget Balance (SAL), which currently stands at Rp420 trillion, approximately US$24.6 billion, with Rp200 trillion presently held within the banking system. Furthermore, the government can utilize alternative revenue streams, such as non-tax state revenue (PNBP) from the energy and mineral resources sectors, to meet subsidy requirements.
To bolster fiscal stability, the minister confirmed that efforts are underway to enhance budget efficiency across government ministries and agencies by reducing non-essential expenditures. He noted the criticality of these measures, explaining that every US$1 increase in global oil prices could add an estimated Rp6.8 trillion to the country’s subsidy costs. The primary goal of these efficiency initiatives is to maintain the fiscal deficit at 2.92 percent without needing to draw from the Excess Budget Balance.
Source: Original
