Indonesia's Economy Threatened by Conflict; Government Urged to Prepare Fiscal Scenario
Jakarta – Mukhamad Misbakhun, Chair of Commission XI of the House of Representatives, has urged the government to immediately activate contingency fiscal scenarios and strengthen monetary stability following the escalation of military attacks by the United States and Israel against Iran, which could pressure the national economy.
In a statement issued in Jakarta on Monday, 2 March 2026, Misbakhun stated that the conflict in the Middle East, involving key players in the global energy supply chain, risks triggering a surge in oil prices and financial market volatility. The consequences could depreciate the rupiah, increase energy subsidies in the state budget, and drive up the prices of goods and services domestically, particularly ahead of Ramadhan and Eid al-Fitr.
“The Ramadhan period is always associated with increased consumer spending. If at the same time global energy prices surge and exchange rates fluctuate, the pressure on domestic inflation will intensify. Therefore, the government must act quickly with a clear fiscal scenario and concrete stabilisation measures,” Misbakhun said.
He argued that the Ministry of Finance must prepare a realistic emergency fiscal scenario, including the possibility of adjusting state expenditure if global oil prices remain elevated. Strengthening fiscal reserves and sharpening spending priorities are said to be crucial to maintain budgetary space without compromising social protection programmes.
On the monetary side, Misbakhun emphasised the importance of close coordination between the Ministry of Finance and Bank Indonesia to maintain currency stability and financial market liquidity. According to him, global shocks frequently trigger capital outflows and pressure on the rupiah, so the mix of fiscal and monetary policies must be integrated.
“Rupiah stability and adequate banking liquidity must not be disrupted. The business community requires certainty, whilst the public needs security. Therefore, fiscal and monetary policies must move in tandem to calm market volatility,” he said.
Furthermore, he called on the government to ensure energy supply availability and smooth logistics distribution domestically remain secure. If oil prices surge significantly, the government must prepare buffer measures to prevent domestic fuel prices from triggering a cascading effect on food and essential commodity prices.
“What we must protect is the public’s purchasing power. We must not allow them to face stacked price increases whilst performing Ramadhan worship and preparing to celebrate Eid al-Fitr,” Misbakhun said.
Commission XI of the House of Representatives, he continued, will monitor the government’s policy response to the conflict’s impact, including on energy subsidies, inflation, exchange rates, and stability of the national financial system.