INDONESIA MAY RAISE SUBSIDISED FUEL PRICES AMID RISING OIL COSTS

JAKARTA, March 8 (Bernama) -- Indonesia could raise subsidised fuel prices if surging global oil prices exceed the state budget’s ability to absorb the cost, Finance Minister Purbaya Yudhi Sadewa said. 

He said any price increase would only be considered if the government can no longer offset the impact of higher oil prices through the national budget.

“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,” he said, according to ANTARA News Agency.

Finance Ministry calculations show the budget deficit could reach 3.7 per cent of gross domestic product (GDP) if oil prices remain at US$92 per barrel throughout the year without government intervention.

Currently, Indonesia’s subsidised fuel prices are set at Rp10,000 (RM2.33) per litre for Pertalite petrol and Rp6,800 (RM1.58) per litre for subsidised diesel.

Purbaya said the government is preparing mitigation measures to prevent higher oil prices from widening the fiscal deficit, including fuel price adjustments or reallocating state spending.

Lower-priority programmes could be trimmed to maintain fiscal health while ensuring essential programmes affecting public welfare remain funded.

He cited the Free Nutritious Meal (MBG) programme as an example, saying spending cuts would target supporting activities rather than meal provision.

“The MBG programme 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, including when crude reached about US$150 per barrel, yet the economy remained resilient.

Prior to this, Indonesia’s Energy and Mineral Resources Ministry said subsidised fuel prices remain stable, and stockpiles are sufficient ahead of the Eid al-Fitr festive period.

-- BERNAMA