Purbaya's Strategy to Contain Oil Price Surge: Ensure State Budget Remains Strong and Avoids Fuel Price Hikes
JAKARTA – The government will monitor global oil price developments on a regular basis to anticipate impacts on the State Budget (APBN) following the surge in global energy prices resulting from the Middle East conflict.
Finance Minister Purbaya Yudhi Sadewa stated that the government will not rush to draw conclusions based solely on oil price movements in the short term.
“It’s only been one day. Our calculations are based on a full year. What’s the average for the whole year? If the annual average is 100 dollars per barrel, that means it continues rising,” said Purbaya after conducting a surprise inspection at Tanah Abang Market in Jakarta on Monday (9 March 2026).
Nevertheless, Purbaya acknowledged that evaluation cannot wait until year-end as decisions taken could prove belated. Therefore, the government will monitor oil price developments over shorter time horizons.
“Waiting a whole year would be too late. If we correct at year-end, it’s already too late. So we’ll see how things look this month, then we’ll conduct a comprehensive evaluation,” he said.
“What’s clear is that we’ll try to absorb the shock as much as possible. We’ll ensure that the momentum of economic growth is not disrupted,” he added.
Purbaya noted that domestic economic activity currently remains in an expansion phase with no significant disruptions yet visible from rising oil prices.
“The economy is still expanding. I haven’t seen any disruption to domestic economic activity from the high prices so far, but it’s only been brief,” said Purbaya.
The Finance Minister stated that domestic energy supply remains adequately secure, as confirmed by Energy and Mineral Resources Minister Bahlil Lahadalia.
“To date, there is no policy to change fuel subsidies, meaning raising fuel prices,” he said.
According to him, the current average global oil price remains within a range that the state budget can absorb, so the government’s fiscal space is considered adequate to withstand the impacts of energy price volatility.
However, the government will continue monitoring price developments in the coming period before making further decisions.
Purbaya also cautioned various parties against hastily concluding that oil prices will continue surging to certain levels.
“Don’t quickly determine that oil prices will continue at 100 dollars per barrel, with some even saying it’s heading towards 150 dollars per barrel and our budget cannot handle it. We will continue to assess it over time,” he said.