Purbaya Assures BBM Subsidies Will Not Bust the 2026 Budget Despite Iran War

Jakarta — President Prabowo Subianto, together with former presidents and vice presidents of the Republic of Indonesia and the chairs of political parties, discussed Indonesia’s fiscal capacity to withstand potential pressures on global oil prices arising from the US-Israel conflict with Iran, at the State Palace in Jakarta, in an agenda following Ramadan fasting. This was disclosed by Finance Minister Purbaya Yudhi Sadewa, who attended the meeting on Tuesday evening (3/3/2026). The gathering was hosted by Prabowo as a Ramadan breaking-fast gathering and discussion. ‘There were discussions among others about how long a crisis like this might last, whether the budget can withstand it, and what the budget would look like,’ Purbaya said, quoted on Wednesday (4/3/2026). Purbaya said that, based on simulations prepared by the Ministry of Finance, the potential for a prolonged crisis caused by cross-border conflicts in the Middle East would not push the state budget into deficit pressure or breach, particularly to bear the burden of BBM subsidies amid rising oil prices. As is known, Middle Eastern countries are major crude oil producers. The conflict, which has begun to widen in the region, has pushed global oil prices higher since the start of the week. According to Refinitiv at 12:55 WIB, Brent crude was at US$80.32 per barrel, up 3.24% from Monday’s close of US$73.20. Meanwhile, West Texas Intermediate (WTI) stood at US$72.41 per barrel, up 2.60% from the previous level of US$71.23. Purbaya said the APBN resilience stems from the government’s improved revenue collection. By January 2026, tax receipts had reached Rp116.2 trillion, up 30.7% year-on-year. ‘If our analysis currently shows things are still good, there is no problem, because our tax collection is improving — January–February growth was 30%. That is a very significant figure, indicating substantial improvements in the economy and in the behaviour of taxpayers and customs officials,’ Purbaya asserted. He also affirmed that, from the year-long simulations, BBM subsidies would not swell to a level that would destabilise the APBN due to the Iran–Israel–US war. It is known that Presidential Regulation (Perpres) No. 118 of 2025 on the Details of the State Budget for Fiscal Year 2026 sets the planned expenditure on fuel and energy subsidies in the General Treasurer’s Budget (BA BUN) at Rp 210.06 trillion, higher than the Rp 203.41 trillion allocated for 2025. ‘In short, we run annual oil-price simulations at a given level for this year’s budget, so it can still be absorbed if oil prices rise. If prices rise too high, or if the scenario is extreme, we will recompute,’ said Purbaya. (arj/haa)