Fadli Zon: Subsidised Fuel Policy Safeguards Inflation and People's Purchasing Power

The government faces a policy dilemma with no truly comfortable option. Culture Minister Fadli Zon views the government’s step to maintain subsidised fuel (BBM) prices as a strategic decision amid uncertain global energy price dynamics. This policy is seen as crucial for safeguarding national economic stability and protecting the purchasing power of the wider public. “The government’s move to continue maintaining subsidised BBM prices is a very appropriate step because it will control inflation and prevent rises in other prices,” said Fadli Zon when met in Central Jakarta on Wednesday (8/4). Protection from Market Mechanisms Fadli explained that if BBM prices were left entirely to market mechanisms, price surges would be unavoidable. The ripple effects would be keenly felt by the public, especially lower and middle-income groups who heavily rely on energy price stability. According to him, the policy of maintaining subsidies is tangible proof of the government’s concern for the people. He compared Indonesia’s situation to several other countries that apply market-based pricing and are now struggling with significant inflation spikes. “This policy reflects the government’s commitment to preserving public welfare. Thus, price stability is expected to be maintained amid global economic pressures,” he added. Certainty Until End of 2026 Previously, the government decided not to raise subsidised BBM prices until the end of 2026. Coordinating Minister for the Economy Airlangga Hartarto once emphasised that this policy would remain in place as long as the average global oil price does not exceed US$97 per barrel. In line with this, Finance Minister Purbaya Yudhi Sadewa affirmed that the current state budget structure is still more than sufficient to support the subsidy burden. Budget Risk Simulations The government has also prepared various mitigation scenarios. Purbaya revealed that simulations have been conducted assuming global oil prices reach US$100 per barrel. This synchronisation of energy policy and social protection measures is expected to serve as a buffer for the domestic economy amid global geopolitical uncertainties.