Oil Prices Rise: Indonesia Fuel Subsidy Review

JAKARTA, KOMPAS.com – The government is open to the possibility of adjusting the price of fuel oil (BBM) subsidies if the surge in world oil prices continues and starts to burden the State Revenue and Expenditure Budget (APBN).

The increase in global energy prices is considered to have the potential to widen the fiscal deficit if it is not balanced with policy adjustment steps.

Finance Minister Purbaya Yudhi Sadewa said the government had carried out simulations of various scenarios for increasing world oil prices.

In these calculations, if the average oil price reaches around 92 US dollars per barrel, the budget deficit has the potential to increase significantly.

“If the price of oil rises to 92 US dollars per barrel, what impact will it have on the deficit? If we don’t do anything, our deficit will rise to 3.6 to 3.7 percent of GDP,” said Purbaya in an Iftar with journalists at the Ministry of Finance on Friday (6/3/2026).

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However, the government still has a number of options to restrain the widening deficit so that it remains below the limit of 3 percent of gross domestic product (GDP).

One of the steps being prepared is to adjust state spending.

However, if pressure on the APBN becomes greater, the government does not rule out the possibility of sharing the burden with the community by adjusting subsidized fuel prices.

“If the budget is not very strong, there is no other way, then we will share some of it with the community. This means there will be an increase in fuel costs if that is the case,” said Purbaya.

Apart from options for adjusting fuel prices, the government is also preparing steps to reallocate state spending. Programs that are deemed not urgent have the potential to be postponed or shifted to the following year to maintain fiscal health.

Purbaya emphasized that the government will prioritize spending that has a direct impact on society. Meanwhile, expenditures that do not really support primary needs can be postponed, such as the procurement of certain goods or projects.

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The surge in global oil prices was triggered by increasing geopolitical tensions in the Middle East. One of them was due to the cessation of operations at Saudi Aramco’s Ras Tanura refinery after a drone attack amidst the escalation of the Israel–Iran conflict.

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