Indonesian Finance Minister Purbaya Yudhi Sadewa confirmed on Monday that subsidized fuel prices will not rise through the end of 2026, even as global oil prices climb amid an escalating US-Israel conflict with Iran. The assurance was delivered during a working session with Commission XI of the House of Representatives (DPR RI) at the Parliament Building in Jakarta on April 6, 2026, in response to direct questioning from Commission Chair Mukhamad Misbakhun on the government’s fiscal readiness. Purbaya also addressed circulating claims — reportedly from within the Ministry of Finance itself — that the state budget could run out within two weeks, dismissing these as unfounded. The guarantee applies specifically to subsidized fuels Pertalite and Solar Subsidi, while the pricing trajectory of non-subsidized fuel remains under review. The announcement carries significant weight for household budgets across Indonesia, where subsidized fuel remains a foundational cost component for transportation, logistics, and daily economic activity.
Key Facts & Background
- The base assumption in the 2026 State Budget (APBN) pegs crude oil prices at USD 70 per barrel; however, the Ministry of Finance has conducted stress-test simulations at USD 80, USD 90, and USD 100 per barrel scenarios.
- Under all tested scenarios, including an average oil price of USD 100 per barrel across the full year, the budget deficit is projected to remain at approximately 2.9% of GDP, below the statutory 3% ceiling.
- The government holds a budget surplus reserve (Sisa Anggaran Lebih / SAL) of Rp 420 trillion, including Rp 200 trillion placed in the banking system, which Purbaya identified as the primary emergency buffer.
- Every USD 1 increase in global oil prices per barrel translates to an additional fiscal subsidy burden of approximately Rp 6.8 trillion for the government.
- Additional revenue buffers include non-tax state revenue (PNBP) from the energy and mineral resources sector, with Energy Minister Bahlil Lahadalia projecting higher commodity income from rising oil and coal prices on global markets.
- To maintain the deficit at the 2.92% target, the Ministry of Finance is simultaneously tightening spending efficiency across all ministries and government agencies.
- Purbaya described the use of SAL reserves as a last-resort scenario, stating his view that oil prices are unlikely to remain above USD 100 per barrel for a sustained period.
- Commission XI Chair Misbakhun publicly reinforced the government’s commitment and requested that the price stability guarantee be communicated broadly to the public.
Note: Multi-source AI data analytics, with the possibility of inaccuracies.
Insights
The government’s assurance is grounded in a reasonably transparent set of fiscal assumptions: stress tests have been run at oil price levels significantly above the APBN baseline, the deficit projection remains within legal bounds under these scenarios, and a substantial liquidity reserve exists as a contingency. The commitment to freeze subsidized fuel prices through year-end is primarily a demand-management and political stability measure — rising fuel costs have historically triggered public unrest in Indonesia, and price stability at the pump has an outsized effect on headline inflation and lower-income household expenditure.
From a macroeconomic standpoint, the strategy is defensible in the short term, particularly if global oil prices moderate as Purbaya expects. However, the credibility of the guarantee depends on conditions that remain outside the government’s control: the trajectory of the US-Iran-Israel conflict, Hormuz Strait supply disruption risks, and broader commodity market volatility. A sustained breach of the USD 100 per barrel threshold would accelerate SAL drawdown and potentially narrow the government’s fiscal space for other spending priorities in the second half of 2026.