Jakarta \u2013 The Middle East conflict between the United States, Israel,\nand Iran has triggered a surge in global oil prices and strained\nIndonesia\u2019s state budget (APBN). The price of West Texas Intermediate\n(WTI) crude oil reached US$100 per barrel in early March 2026, affecting\nAPBN deficit calculations.<\/p>\n
\u201cEach US$1 per barrel increase in crude oil prices adds Rp10.3\ntrillion to energy subsidy expenditure, but also raises government\nrevenues by Rp3.5 trillion. This means the budget deficit increases by\napproximately Rp6.8 trillion per dollar of oil price rise,\u201d said\nChristiantoko, Executive Director of the Next Indonesia Center, in\nJakarta on Sunday 15 March 2026.<\/p>\n
A simulation by the Next Indonesia Center indicates that if the\nconflict continues for six months and oil prices rise by an average of\n21.66% from the 2026 budget assumption of US$70 per barrel, oil prices\ncould reach US$85.2 per barrel. Under these conditions, the APBN deficit\ncould increase from Rp689.2 trillion to Rp740.7 trillion, or 2.88% of\nGDP. \u201cThis deficit remains below the 3% maximum limit set by the State\nFinance Law, but it requires caution if prices rise 35%,\u201d Christiantoko\nadded.<\/p>\n
To safeguard budget resilience, Christiantoko recommended efficiency\nin government ministry and agency expenditure not directly serving the\npublic. Goods and services spending, which has risen to Rp141.8\ntrillion, should become a focus for cost savings. Energy subsidy reform\nis also pressing, as current fuel oil and liquefied petroleum gas\nsubsidies largely benefit high-income groups. \u201cThe potential for\nbetter-targeted subsidy reallocation reaches Rp133.5 trillion, which\ncould strengthen the APBN,\u201d he said.<\/p>\n
Additionally, leveraging state investments through state-owned\nenterprises and investment management bodies such as Danantara can\ncreate stable additional revenue sources. Singapore\u2019s Net Investment\nReturns Contribution (NIRC) model could serve as a reference for\nmitigating the impact of global energy price fluctuations.<\/p>\n
Christiantoko also emphasised the importance of public confidence.\n\u201cThe government must demonstrate a willingness to share the burden, such\nas cutting official facilities, enforcing anti-corruption laws, and\nimplementing fair policies. Strong public support will help maintain\nnational economic stability amid global pressures,\u201d he explained.<\/p>\n
With strategies centred on expenditure efficiency, subsidy reform,\nand enhanced use of state investments, Indonesia\u2019s budget is expected to\nwithstand shocks from global energy prices whilst maintaining public\ntrust in government fiscal policy.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/indonesias-budget-tested-amid-iran-vs-us-israel-conflict-1773683592", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }