{
    "success": true,
    "data": {
        "id": 1609485,
        "msgid": "governments-fiscal-test-amid-iran-war-weighed-down-by-subsidy-burden-and-inflation-control-1773359716",
        "date": "2026-03-13 06:15:00",
        "title": "Government's Fiscal Test Amid Iran War, Weighed Down by Subsidy Burden and Inflation Control",
        "author": "Aprillia Ika",
        "source": "KOMPAS",
        "tags": "",
        "topic": "Finance",
        "summary": "Indonesia's fiscal position faces significant pressure from escalating Middle East tensions involving Iran, the United States, and Israel, which threaten to drive up global oil prices and strain the government's budget through energy subsidies. According to Prasasti Center for Policy Studies, if average oil prices reach $92 per barrel, Indonesia's budget deficit could widen to 3.6\u20133.7 per cent of GDP, exceeding the government's 3 per cent fiscal discipline threshold. The government faces difficult policy choices: maintaining domestic fuel prices through subsidies would increase budget pressure, whilst allowing prices to rise with market mechanisms could directly impact inflation and public purchasing power.",
        "content": "<p>Jakarta \u2013 The Prasasti Center for Policy Studies has reported that\nthe effects of the Middle East conflict involving Iran, the United\nStates, and Israel could extend to the government\u2019s fiscal position,\nparticularly through the energy subsidy mechanism.<\/p>\n<p>Piter Abdullah, Policy and Program Director at Prasasti, explained\nthat Indonesia\u2019s State Budget (APBN) structure remains quite sensitive\nto fluctuations in global oil prices.<\/p>\n<p>\u201cConsequently, spikes in energy prices can quickly increase the\nburden of government spending,\u201d he said during an exclusive interview on\nthe impact of the Iran-US conflict escalation on Indonesia, Thursday (12\nMarch 2026).<\/p>\n<p>Piter noted that several economic simulations indicate that if\naverage oil prices hover around $92 per barrel, the budget deficit in\n2026 could potentially widen to approximately 3.6\u20133.7 per cent of Gross\nDomestic Product (GDP).<\/p>\n<p>This figure exceeds the 3 per cent fiscal deficit limit that has long\nserved as Indonesia\u2019s fiscal discipline benchmark.<\/p>\n<p>\u201cWhen oil prices rise, the government faces difficult policy choices.\nRestraining fuel price increases through subsidies will add pressure to\nthe APBN. Conversely, if prices are released to follow market\nmechanisms, the impact can be directly felt in inflation and public\npurchasing power,\u201d Piter explained.<\/p>\n<p>Piter assessed that in a situation of rising global energy prices,\nthere are several possible policy responses in managing energy\nsubsidies.<\/p>\n<p>When domestic fuel prices are maintained whilst global oil prices\nincrease, the burden of energy subsidies in the APBN could surge\nsignificantly.<\/p>\n<p>\u201cConversely, if fuel prices are adjusted to follow market mechanisms,\ninflationary pressures as well as increases in transportation and\nlogistics costs can be immediately felt by the public and business\nactors. Another alternative is limited subsidy increases accompanied by\nvarious price stabilisation programmes, although this approach would\nstill increase state spending,\u201d he explained.<\/p>\n<p>Piter said the main impact of this conflict is causing a rise in\nglobal oil prices. Globally, this will also affect disruptions to\nlogistics supply chains.<\/p>\n<p>Additionally, global trade transaction activities, including exports\nand imports, are forecast to decline.<\/p>\n<p>This will also be felt by Indonesia, particularly from the\nperspective of importing raw materials. When economic activity is\ndisrupted, tax revenues will also be disrupted.<\/p>\n<p>\u201cOil prices will cause potential increases in domestic fuel prices,\u201d\nhe stated.<\/p>\n<p>He added that if allowed to rise unchecked, fuel prices could\ninstantly cause inflation to become uncontrollable.<\/p>",
        "url": "https:\/\/jawawa.id\/newsitem\/governments-fiscal-test-amid-iran-war-weighed-down-by-subsidy-burden-and-inflation-control-1773359716",
        "image": ""
    },
    "sponsor": "Okusi Associates",
    "sponsor_url": "https:\/\/okusiassociates.com"
}