Commission XI Urges Government to Prepare Fiscal Scenarios for Iran Conflict Impact
Jakarta—The head of Commission XI of the Indonesian House of Representatives, Mukhamad Misbakhun, has urged the government to immediately activate contingency fiscal scenarios and strengthen monetary stability, following the escalation of military attacks by the United States and Israel against Iran, which could put pressure on the national economy.
Speaking in Jakarta on Monday, Misbakhun stated that the Middle East conflict involving a key nation in the global energy supply chain risks triggering spikes in oil prices and financial market volatility.
The consequences could weaken the rupiah exchange rate, increase energy subsidies in the state budget, and drive up prices of goods and services domestically, particularly approaching Ramadan and Eid al-Fitr.
“Ramadan is always associated with increased public consumption. If at the same time global energy prices spike and exchange rates fluctuate, the pressure on domestic inflation will become more acute. Therefore, the government must act quickly with clear fiscal scenarios and concrete stabilisation measures,” said Misbakhun.
He believed the Ministry of Finance needs to prepare realistic emergency fiscal scenarios, including the possibility of adjusting the state spending posture if world oil prices remain elevated.
Strengthening fiscal reserves and sharpening spending priorities are said to be important to maintain budget space without compromising social protection programmes.
On the monetary side, Misbakhun emphasised the importance of close coordination between the Ministry of Finance and Bank Indonesia to maintain exchange rate stability and financial market liquidity.
According to him, global turbulence often triggers capital outflows and pressure on the rupiah, so the mix of fiscal and monetary policies must be integrated.
“Rupiah stability and adequate banking sector liquidity must not be disrupted. The business world requires certainty, whilst the public needs reassurance. Therefore, fiscal and monetary policy must move in tandem to calm market turbulence,” he said.
Additionally, he asked the government to ensure energy supply and domestic logistics distribution remain uninterrupted.
Should oil prices spike significantly, the government needs to prepare buffer measures to prevent domestic fuel prices from triggering cascading effects on food and essential goods prices.
“What we must protect is the public’s purchasing power. They must not face multi-layered price increases whilst observing Ramadan and preparing to celebrate Eid al-Fitr,” said Misbakhun.
Commission XI, he continued, will monitor the government’s policy response to the impacts of the conflict, including energy subsidies, inflation, exchange rates, and the stability of the national financial system.