Purbaya assures that global oil price surge will not disrupt state budget

Finance Minister Purbaya Yudhi Sadewa has emphasised that the surge in global oil prices, which approached $100 per barrel, will not undermine the stability of the State Revenue and Expenditure Budget (APBN). He made this statement while recounting his conversation with President Prabowo Subianto regarding concerns over the pressure from oil prices on the nation’s fiscal position. “The President asked, ‘How is the APBN?’ I replied, ‘It’s safe, Sir!’” Purbaya said in Jakarta on Friday. Purbaya assured that the government has carefully calculated several scenarios in the event that oil prices rise even higher. The Ministry of Finance has prepared various mitigation steps to maintain APBN stability amid global pressures, particularly due to rising energy prices. Nevertheless, he acknowledged that these measures have not yet been fully communicated to the public. Therefore, the government will strengthen public communication regarding the future fiscal condition. Purbaya also emphasised that the government remains calm in facing global dynamics, although internal discussions have been quite intensive. He assured that all calculations in the APBN are conducted in a measured and transparent manner. “There are no strange figures or uncalculable numbers in the current APBN,” he added. Meanwhile, Coordinating Minister for Economic Affairs Airlangga Hartarto explained several scenarios of the impact of the global oil price increase on the APBN. According to him, if these assumptions materialise, the budget deficit could potentially exceed the 3 percent limit. In the first scenario, the Indonesian Crude Price (ICP) is estimated to be around $86 per barrel, with the rupiah exchange rate at approximately Rp17,000 per US dollar, weaker than the APBN assumption of Rp16,500 per US dollar. With economic growth of 5.3 percent and government securities yields around 6.8 percent, the APBN deficit is estimated to reach 3.18 percent. In the moderate scenario, oil prices are projected at around $97 per barrel with the rupiah weakening to Rp17,300 per US dollar. Economic growth is estimated at 5.2 percent and SBN yields at 7.2 percent, potentially increasing the deficit to 3.53 percent. In the pessimistic scenario, oil prices are estimated to reach $115 per barrel, with the rupiah weakening to Rp17,500 per US dollar. With economic growth around 5.2 percent and SBN yields at 7.2 percent, the APBN deficit is estimated to widen to 4.06 percent.