Government Boldly Holds Fuel Prices Steady Until End of 2026, Here's Purbaya's Calculation

Jakarta, CNBC Indonesia - The government has confirmed that subsidised fuel prices will not be increased despite the surge in global oil prices.

Finance Minister Purbaya Yudhi Sadewa stated that the government has calculated various scenarios, ranging from an average oil price of US$80 per barrel, US$90 per barrel, to US$100 per barrel throughout 2026.

From these scenarios, the government concluded that the state budget remains robust enough to absorb the pressure, with the deficit still manageable at around 2.92% of GDP. Purbaya even emphasised that the government is prepared to hold subsidised fuel prices steady until the end of the year.

“With other exercises, such as cuts here and there and savings elsewhere, we can ensure the deficit remains around 2.9%. I want to reiterate that subsidised fuel prices will not rise until the end of the year, and my budget is sufficient,” Purbaya explained during a press conference on Monday (6/4/2026).

In the most severe scenario, where the average oil price reaches US$100 per barrel throughout the year, the pressure on the state budget would indeed intensify. However, the government assesses that fiscal space is still available.

According to the Ministry of Finance’s sensitivity analysis, a surge in oil prices to that level would mean additional pressure on the budget deficit of around Rp204 trillion. This figure arises because the oil price in the 2026 state budget macro assumptions is set much lower.

Here’s the Calculation

The calculation stems from the Ministry of Finance’s stress test on changes in macro assumptions. In the 2026 state budget macro assumptions, the government set the ICP at US$70 per barrel.

Meanwhile, the Ministry of Finance has calculated that every US$1 per barrel increase in ICP above that assumption could potentially add around Rp6.8 trillion to the budget deficit.

Thus, if the average oil price throughout 2026 rises to US$100 per barrel, there is a difference of about US$30 per barrel from the state budget macro assumptions.

Multiplying that difference by the fiscal impact of Rp6.8 trillion for every US$1 increase results in additional pressure on the budget deficit of around Rp204 trillion. This is the origin of the figure cited by the government.

For reference, according to Refinitiv data, the year-to-date average Brent oil price as of Monday (4/6/2026) is around US$79 per barrel. This means the current average oil price is still below the severe US$100 per barrel scenario but already about US$9 per barrel higher than the 2026 state budget macro assumptions.

In addition to oil prices, the rupiah exchange rate against the US dollar also affects the size of the state budget deficit.

In the same stress test, the Ministry of Finance estimates that every Rp100/US$ weakening of the rupiah could add around Rp0.8 trillion to the deficit. In other words, not only do energy price surges burden the fiscal position, but exchange rate movements do as well.

In the 2026 state budget macro assumptions, the government set the rupiah exchange rate at Rp16,500/US.Meanwhile, theaveragerupiahrateisatRp16, 845/US. This means the average rupiah is already about Rp345 per US dollar weaker than the 2026 state budget macro assumptions.

Despite the significant pressure, Purbaya urged the public not to worry. This is because the government still has a fiscal buffer in the form of the Budget Surplus Balance (SAL), which is currently reported to have reached Rp420 trillion.

According to him, this reserve can serve as a support if oil prices truly spike uncontrollably. With this buffer, the government believes there is still sufficient fiscal space to keep the state budget safe while holding subsidised fuel prices steady.

Learning from History

The government has actually prepared a substantial budget for energy subsidies in 2026. In the 2026 state budget, the total energy subsidy allocation is Rp210.1 trillion.

Of that amount, the budget for specific fuel subsidies and 3 kg LPG subsidies totals Rp105.4 trillion. The breakdown is Rp25.1 trillion for specific fuel subsidies and Rp80.3 trillion for 3 kg LPG subsidies.

However, looking at experiences from previous years, the budget for fuel subsidies and compensation often does not stop at the initially set figure. In many cases, the realisation exceeds the initial allocation.

This means the government can set a certain ceiling in the state budget, but when oil prices surge, the rupiah weakens, or energy consumption swells, subsidy spending usually increases accordingly.

This pattern is evident from historical data. In 2008, for example, the allocated budget for fuel subsidies and compensation was Rp126.8 trillion, but the realisation rose to Rp139.1 trillion.

Even in 2022, the jump was much larger, from an allocation of Rp149.4 trillion to a realisation of Rp422.8 trillion.

However, this pattern is not always the same every year. In 2023, for instance, the realisation of energy subsidies was actually lower than the initial allocation.

This situation was largely influenced by global crude oil prices moving below the state budget assumptions. In the 2023 state budget, the ICP was set at US$90 per barrel, whereas the average realisation was only US$78.43 per barrel. Meanwhile, the government also contained subsidy burdens through controls on the volume of subsidised fuel and LPG consumption.