Economists assess state budget as still resilient but caution is needed

Professor Rahma Gafmi from Universitas Airlangga assesses that the State Revenue and Expenditure Budget (APBN) still possesses resilience amid the surge in global energy prices. Nevertheless, she notes that Indonesia’s fiscal space is beginning to face pressure. “This resilience (of the APBN) is being tested to its limits. If oil prices remain above $90 US per barrel in the long term, the government must choose between increasing debt (widening the deficit) or raising fuel prices to prevent the APBN from ‘collapsing’,” Rahma told ANTARA in Jakarta on Sunday. She explained that in this regard, developments in the budget deficit need to be monitored because its realisation tends to increase more quickly than initial estimates for the year. As of March 2026, the APBN deficit was recorded to have surged to around Rp240.1 trillion, or up 140% compared to the same period last year. Despite this, Rahma views that the government still has room to keep the deficit within safe limits, in line with the set targets. “The government’s initial target is 2.68% of GDP. As economists, we warn of the risk of the deficit approaching the constitutional safe limit of 3.0% if oil prices do not soon ease or if the government does not adjust fuel prices,” she said. Although the APBN still demonstrates resilience, Rahma underscores the need for careful management amid current global uncertainties. With fluctuating energy price dynamics and ongoing geopolitical pressures, she emphasises the importance of adaptive policy responses to maintain fiscal stability while supporting national economic growth. “Finance Minister Purbaya remains optimistic about keeping it below 3%, but discussions are emerging regarding the need for a Government Regulation in Lieu of Law if geopolitical conditions deteriorate extremely to provide wider fiscal space,” said Rahma. Previously reported, Finance Minister Purbaya Yudhi Sadewa stated that the government remains optimistic about keeping the 2026 APBN deficit below 3%, or around 2.9% of gross domestic product (GDP), despite rising global oil prices. According to him, this assumption has already factored in a scenario of oil prices reaching $100 US per barrel throughout the year. “We have calculated everything. Even with an average (global oil price) of 100 (US dollars per barrel), we have locked the deficit below 3%. That’s around 2.9%. So, no problem,” Purbaya said in Jakarta on Wednesday (8/4). He added that the government also has sufficient fiscal buffers, including the Budget Surplus Balance (SAL) that can be used in emergencies. “If it’s really tight, I have the SAL. Now it’s up to Rp420 trillion. It will be used if it’s really desperate,” he said. In addition, the government is implementing spending efficiencies in ministries and maintaining the stability of subsidised fuel oil (BBM) prices to protect people’s purchasing power.