JAKARTA: The government is holding subsidised fuel prices steady through year-end as global oil price tops US$100 a barrel, with Finance Minister Purbaya Yudhi Sadewa saying the state will absorb the shock rather than pass it on to consumers.
“No, [fuel prices will not increase]. The pressure will be absorbed in the state budget. If we allow [fuel prices to increase], like in other countries, people could panic,” Purbaya said on Thursday (March 19), as quoted by Antara.
Purbaya said current oil prices had already been factored into full-year subsidy calculations and that fiscal space remained adequate, supported by available reserves as well as revenue measures and government spending cuts to keep the budget intact.
“The figures are still safe until now,” he emphasised. “I still have budget buffers we can tap, some of which not all analysts are aware of.”
The amount allocated for fuel subsidies is based on an assumed average oil price, which amounts to US$70 in the 2026 budget plan, meaning higher market prices would widen subsidy costs.
Brent Crude settled at US$108.65 a barrel after briefly spiking to nearly US$119 on Thursday following overnight strikes by Iran and United States allies on key energy infrastructure in the Gulf overnight, extending the US-Israeli war against Iran into its 20th day.
Coordinating Economy Minister Airlangga Hartarto said on Thursday that the government would keep the fiscal deficit within the legal ceiling of three per cent of gross domestic product despite rising energy costs.
The government will also turn to other measures, including mandatory work-from-home for public and private workers as well as a coal export tax to capture windfall profits and lift state revenue. - The Jakarta Post/ANN
