Jakarta (WNAM MONITORING): Indonesia’s Finance Minister Purbaya Yudhi Sadewa said subsidized fuel prices could increase if global oil prices continue rising and surpass the national budget’s capacity to offset costs.
“If the budget cannot sustain the pressure, there is no alternative but to share the burden with the public, which means a fuel price increase,” Purbaya said Friday in Jakarta.
He stressed that any price hike would occur only if the state budget can no longer absorb global oil price pressures.
Finance Ministry calculations show the budget deficit could reach 3.7 percent of GDP if oil prices hold at US$92 per barrel all year without government intervention.
Purbaya said the government will implement mitigation measures to prevent higher oil prices from widening the fiscal deficit.
Options include fuel price adjustments or reallocating state spending. Low-priority programs could be trimmed to maintain fiscal health, while essential programs affecting public welfare remain fully funded.
He cited the Free Nutritious Meal (MBG) program as an example. Budget shifts would target supporting activities, like vehicle purchases for the Nutritional Services Unit, rather than core meal provision.
“The MBG program is good, but we want to avoid spending on items that do not directly support food delivery, like buying motorcycles,” he said.
Purbaya noted Indonesia has previously faced stronger oil price shocks, with crude reaching about US$150 per barrel, yet the economy remained resilient.
He expressed confidence the current surge can also be managed. “We’ve been through US$150 per barrel before. The economy slowed slightly but did not collapse. We have experience handling this,” he said.
Global oil prices spiked due to Middle East tensions stemming from US-Israel-Iran conflicts.
Brent crude rose 4.93 percent to US$85.41 per barrel, while US WTI climbed 8.51 percent to US$81.01 per barrel.
Both prices are higher than January 2026 averages, when Brent was US$64 per barrel and WTI US$57.87 per barrel.
Despite price volatility, Indonesia’s Ministry of Energy and Mineral Resources (ESDM) assured subsidized fuel prices remain stable and stockpiles are sufficient ahead of Eid al-Fitr celebrations.
