Indonesia Government Plans Spending Cuts If Oil Prices Surge
Finance minister says budget adjustments will keep deficit below legal 3% limit
Indonesia is preparing contingency measures to protect its fiscal stability as escalating Middle East tensions threaten to push global oil prices higher and strain the country’s economy.
Government Preparing Budget Adjustments
Indonesia’s government is ready to adjust spending to ensure its fiscal deficit stays below the legal ceiling of 3 percent of gross domestic product.
Finance Minister Purbaya Yudhi Sadewa said contingency plans are already in place as global oil price volatility could increase fiscal pressure on Southeast Asia’s largest economy.
Oil Price Surge Could Expand Deficit
The finance ministry estimates that if crude oil prices rise to around US$90 per barrel, Indonesia’s deficit could widen to about 3.6 percent of GDP without policy adjustments.
The 2026 national budget assumed an oil price of US$70 per barrel, meaning sustained price increases would significantly affect government spending.
Redirecting Energy Imports From Middle East
Indonesia is also adjusting its energy supply strategy due to escalating conflict in the Middle East.
Energy Minister Bahlil Lahadalia said some crude oil imports currently sourced from the region will be redirected to the United States to ensure supply stability.
Free Meal Programme May Be Scaled Back
To maintain fiscal discipline, the government is considering reducing spending on its ambitious free meals programme.
The initiative, designed to provide daily nutritious meals to up to 83 million Indonesians, costs around US$20 billion and has drawn scrutiny from investors and credit rating agencies.
Government Confident Deficit Limit Will Hold
Despite concerns, Purbaya said fears about Indonesia breaching its deficit limit are misplaced.
He emphasised that the government aims to balance economic growth targets with fiscal sustainability while working toward President Prabowo Subianto’s goal of achieving 8 percent GDP growth.
Indonesia’s fiscal strategy reflects a delicate balance between sustaining economic growth and maintaining financial discipline amid global uncertainty. As energy prices fluctuate and geopolitical tensions rise, the government’s ability to adapt its budget and energy policies will play a critical role in safeguarding economic stability.
Sources: CNA (2026) , EN Antara (2026)
Keywords: Indonesia Budget Deficit, Purbaya Yudhi Sadewa Policy, Indonesia Oil Import Strategy, Prabowo Economic Plan, Indonesia Fiscal Stability