Purbaya: Easing of US-Iran Conflict Opens Additional Fiscal Space in State Budget
Finance Minister Purbaya Yudhi Sadewa assessed that the easing of the conflict between the United States and Iran has the potential to provide additional room in the State Budget (APBN). When asked about the impact of this development, Purbaya briefly danced before delivering his answer. “Well, it should be like that, right,” Purbaya said at the Parliament Complex in Jakarta on Monday (15/6/2026).
According to him, the government had previously set aside some budget to anticipate a rise in subsidies due to global energy price volatility. If geopolitical tensions ease and energy prices stabilise, subsidy requirements could decrease, thereby freeing up fiscal space to finance the government’s priority programmes. “Previously, we had set aside some budget for subsidies. So it will be greatly reduced, and there will be room to provide financing for other programmes deemed important by the president,” he said.
Nevertheless, Purbaya stressed that the government will continue to monitor global developments before making further adjustments to fiscal policy. “We will see how it goes and then adjust,” he stated.
On the same occasion, Purbaya revealed he will depart for China to meet investors and discuss plans to issue panda bonds. However, he was not yet willing to disclose the target amount of funds to be raised through the instrument.
Purbaya also previously stated that the Ministry of Finance is continuing bureaucratic reform by breaking down silos between work units that have hindered coordination. He said this step is being taken so that cooperation between units within the Ministry of Finance, including the Directorate General of Taxes and the Directorate General of Customs and Excise, can proceed more quickly and effectively. “There used to be many silos; now we are opening them up so that directorates can work faster. For example, cooperation between tax and customs used to be very difficult, but now it can be resolved,” Purbaya said.
On Monday (15/6/2026), Commission XI of the House of Representatives also approved the indicative budget ceiling for the Ministry of Finance for the 2027 fiscal year amounting to Rp 49.8 trillion. Purbaya said the allocation will be used to maintain fiscal stability, strengthen the quality of public services, and support inclusive and sustainable economic transformation.