Dilemma of Non-Subsidised Fuel: Balancing Fiscal Stability and Public Purchasing Power

The world is currently facing an economic storm of uncertainty triggered by escalating geopolitical conflicts, particularly in the Middle East region. The closure of vital logistics routes such as the Strait of Hormuz has caused severe shocks to the global energy supply chain, directly driving up crude oil prices beyond the fiscal assumptions of many countries, including Indonesia. Amid this situation, the policy to adjust non-subsidised Fuel Oil (BBM) prices starting 18 April 2026 has become a national flashpoint. The government is confronted with a bitter reality: maintaining unrealistic prices at the risk of breaching the State Revenue and Expenditure Budget (APBN), or allowing prices to follow market mechanisms that could suppress the purchasing power of the wider population. This issue is not merely numbers on paper but a crucial matter touching the core of the economy from industrial sectors to household kitchens. Energy and Mineral Resources Minister Bahlil Lahadalia explained that the price adjustment for certain types of BBM is a logical consequence of the policy dividing roles between the government and the market. Bahlil emphasised that the government’s authority is fully focused on regulating subsidised BBM prices to protect vulnerable communities. Meanwhile, for non-subsidised BBM types used by industrial sectors and upper-class society, prices follow global market fluctuations as stipulated in the ministry’s 2022 regulations. In line with this perspective, former Vice President of the Republic of Indonesia Jusuf Kalla has voiced support for this adjustment as a preventive measure that should have been anticipated. He assessed that the significant global oil price surge makes maintaining national finances unsustainable without price adjustments. JK warned that if the government continues to enforce old prices amid import cost increases reaching up to Rp 10,000 per litre, the budget deficit will widen further and endanger macroeconomic stability. For him, adjusting prices for affluent groups is a bitter but necessary step to safeguard national fiscal health in the future. On the other hand, member of DPR RI Commission VI, Mufti Anam, has expressed deep concerns about the domino effects that this policy could trigger. Although the policy targets middle to upper groups, Mufti believes the downstream impacts will still be felt by all societal layers through inflation in food and logistics sectors.