Indonesia's Energy Resilience and Fiscal Challenges
Jakarta (ANTARA) - Global turmoil is once again testing Indonesia’s economic resilience, not just in numerical terms, but also in the nation’s ability to read the direction of risks and respond with appropriate strategies.
The conflict involving Iran, Israel, and the United States, since the end of February 2026, has spread far beyond its geographical boundaries.
Energy disruptions in the Strait of Hormuz have driven Brent crude oil prices close to $120 per barrel, while pressure on the rupiah exchange rate has moved it to the range of Rp16,900 to Rp17,058 per US dollar.
This situation is not merely an episode of ordinary volatility, but a serious warning about the fragility of foundations that have long been considered sufficiently solid.
In this context, the government’s initial steps deserve appreciation. Policies such as work-from-home (WFH) for civil servants, efficiency in mobility and official travel, refocusing of ministry and agency spending, optimisation of the Free Nutritious Meals (MBG) programme for five days, and strengthening of the energy efficiency agenda demonstrate that responses are no longer reactive, but are beginning to move towards measured risk management.
This approach serves as an important signal that the state is present with full awareness of the complexity of the challenges faced.
However, this phase is only the beginning. The real challenge lies in the endurance of these policies if global pressures persist longer and more intensely.
The key question is no longer whether the government has acted, but whether the existing policy package is sufficient to maintain APBN stability, control inflation, and preserve market confidence.
It is here that structural issues that have long been overlooked begin to become apparent. Indonesia enters 2026 with a relatively narrow fiscal buffer, while dependence on energy imports remains high.
This combination creates dual vulnerabilities. When global oil prices surge, the impact is not only felt in the energy sector, but also spills over into fiscal matters, inflation, and people’s purchasing power. Energy resilience, in this perspective, is no longer merely a technical sectoral issue, but the core of economic sovereignty.
Direction of risks
Simulations and research conducted by the GREAT Institute provide an increasingly clear picture of the direction of risks.
In a moderate scenario, when oil prices are in the range of USD 93 to 97 per barrel, the fiscal deficit is estimated to still be manageable within 3.25 to 3.55 percent of GDP.
When pressures intensify and oil prices move to the range of USD 105 to 120 per barrel, the deficit could widen to 3.80 to 4.30 percent of GDP. This is not just numbers, but a reflection of increasingly compressed fiscal space.
GREAT Institute economist Adrian Nalendra Perwira has also emphasised that each scenario requires a different policy response.
In the initial stage, the country still has room to rely on fiscal discipline, spending reprioritisation, and efficiency in programmes with low multipliers.