Government takes cautious approach to fiscal policy changes amid global oil price movements
Jakarta — Finance Minister Purbaya Yudhi Sadewa has stated that the government is monitoring the rise in global oil prices with a cautious approach to avoid hastily changing fiscal policy.
Purbaya made the statement at the Presidential Palace complex in Jakarta on Tuesday in response to significant fluctuations in global oil prices over the preceding three days (8–10 March 2026) and their impact on rising fuel prices ahead of Eid al-Fitr in Indonesia.
“We need to observe carefully and ensure prices are genuinely rising or falling, not just fluctuating temporarily,” the Minister said. “If prices rise consistently over several weeks, we can anticipate further increases. But if they suddenly fall again, it becomes problematic.”
Purbaya stated that the government would first verify the direction of price movements before implementing any adjustments to the State Budget (APBN).
“If oil prices fall later, we would have to change policy again. That would be inefficient. Therefore, setting APBN responses requires more careful consideration than responding to daily financial market movements,” he explained.
According to Purbaya, the current fuel subsidy allocated in the APBN is calculated on an annual basis at an assumed rate of $70 per barrel.
“This recent price increase has only been for a few days. Our subsidy is budgeted for a full year at an average of $70 per barrel. This temporary spike alone does not warrant immediate policy changes,” he stated.
The Minister emphasised that fiscal policy changes require more thorough deliberation compared to financial market responses, which occur on a daily basis.
“We must first confirm the direction of price movements. Once it becomes genuinely clear, then we will engage all stakeholders to take action,” he said.
Nevertheless, Purbaya assured that the government’s fiscal position remains strong to withstand external pressures, including potential increases in global energy prices.
The Minister allocated one month for evaluating potential APBN adjustments.
He stressed that the cautious approach to responding to global oil price dynamics is part of the government’s strategy to maintain fiscal stability and ensure budgetary credibility amid global economic uncertainty.
According to reports, Brent crude oil prices reached $118 per barrel for the first time since 17 June 2022. The surge in global oil prices has been driven by escalating conflict between the United States and Israel against Iran.