Finance Minister Purbaya States Fiscal Position Remains Safe and Strong Amid Global Oil Price Volatility
Finance Minister Purbaya Yudhi Sadewa has assured the public that the state budget allocated for fuel subsidy requirements remains adequate. He stated that the government’s financial resources are sufficiently robust to absorb subsidy costs despite ongoing volatility in global oil prices.
“We remain safe and strong. This price increase has only occurred over a few days. We have subsidies allocated for the entire year. Our annual assumption is around USD 70 per barrel. This is only a few days of movement, so it is insufficient to change our budget. We can still absorb it,” he told reporters at the Presidential Palace on Tuesday (10 March).
Purbaya noted that global oil price movements occur far more rapidly than stock market fluctuations. Consequently, the government does not immediately respond reactively to oil price movements.
Decision-makers will continue monitoring developments and calculating the potential impact of rising oil prices on state expenditure. “We ensure our budgetary response is more cautious than responding to stock market movements,” Purbaya explained.
“We establish what the movement looks like first. Once confirmed, we will then engage everyone. Currently it keeps changing – USD 120 per barrel previously was the high, now it is USD 90. What if it drops further? It keeps changing. So we estimate what the actual direction might be,” he added.
Meanwhile, Energy and Mineral Resources Minister Bahlil Lahadalia assured that fuel subsidy prices will not increase despite fluctuations in global crude oil prices.
“The state is committed to ensuring that even if global crude oil prices rise, subsidised fuel prices will remain unchanged – there will be no price increase for subsidised fuel,” he stated.
The movement in global oil prices, according to Bahlil, will significantly impact the state budget. Even though the Finance Minister has confirmed fiscal conditions remain sufficiently strong, the government is also exploring alternative energy sources.
“We are mitigating the situation by seeking alternative energy sources beyond fossil fuels, including biofuels,” Bahlil explained.
Regarding panic buying of fuel occurring in several regions, Bahlil deemed such action unnecessary, as fuel stocks are adequate.
“There is no need for panic buying because our fuel stocks are sufficient. The 21 to 25 days mentioned refers to our storage capacity. But fuel circulates constantly, our industries continue operating, and our imports face no problems. Especially from the Middle East where we only import crude oil, whilst refined fuel is imported from Southeast Asian countries and domestic production. So there should be no reason for such behaviour,” Bahlil concluded.