The Indonesian government said it will cut spending to cope with the pressure from oil prices.
YAKUZAKA, Jakarta, March 19 (Reporter Feng Yulin) Due to the increase in international oil prices caused by conflicts in the Middle East, the government of Indonesia is facing greater financial pressure. Indonesian Minister of Economic Coordination Elangga Hartharto said recently that before the situation becomes clear, the government will prioritize addressing the impact by cutting public expenditures and continue to maintain the legal upper limit of a 3% fiscal deficit to the gross domestic product (GDP).
The Indonesian government has long implemented subsidies for some fuels to maintain domestic price stability. The 2026 fuel subsidy budget was based on an oil price assumption of $70 per barrel. However, affected by geopolitical conflicts, the current international oil prices have significantly exceeded the budget level, meaning the government needs to increase a large amount of subsidy expenditures.
Indonesian Finance Minister Purbaia Yudi Sadwa said that only during a "crisis period" of a full economic recession will the government consider adjusting the deficit limit through regulatory changes, but there are currently no related plans.