Finance Minister Opens Up the Option to Raise BBM Prices If Global Oil Prices Surge

Finance Minister Purbaya Yudhi Sadewa says the government is prepared to raise the price of fuel (BBM) should world oil prices spike to levels that would burden the state budget. The government has conducted various simulations to gauge the impact of global oil prices on the state budget (APBN). In the scenario, if oil prices reach US$92 per barrel and no concrete policy measures are taken, the budget deficit could widen to around 3.67% of GDP. Brent crude was up 4.93% at US$85.41 per barrel.

‘If the budget is not that strong, there is no other option; we share with the public. That is, there would be a BBM increase if the valuations are high now and the budget is not resilient,’ he said in Jakarta on Friday (6/3).

Mr. Minister noted Indonesia had faced tougher times when world oil prices touched US$150 per barrel; yet the economy was still able to withstand the energy price pressures.

According to him, price adjustments for BBM could happen, but this would be considered only if oil prices surge very high. ‘For me, high is around US$185 per barrel,’ he said.

To mitigate deficits and keep within statutory limits, the government has prepared various steps, including spending savings or reallocation of state expenditure. It will review budget items not directly supporting program priorities. The ‘Makan Bergizi Gratis’ (MBG) programme remains important and will not be cut from the provision of food. However, expenses not directly linked to the programme’s main objective — such as purchase of additional equipment or other ancillary needs — could be reviewed.

‘MBG is good, but we will prevent spending that does not directly support the food aspect,’ the State Treasurer (Bendahara Negara) said.

Additionally, the government is open to shifting some ministry/agency spending to next year. For example, on infrastructure projects such as bridges or schools that technically need not be completed within a single fiscal year.

Minister Purbaya also stated that disbursement of the Hari Raya allowance (THR) for civil servants is expected to be completed within about a week.”