Purbaya's Strategy to Guard the APBN Deficit Amid Geopolitical Tensions

Finance Minister Purbaya Yudhi Sadewa said the government will take steps to cut spending so that the fiscal deficit does not exceed 3 percent of GDP in the face of the ongoing geopolitical situation. He said the budget deficit could reach 3.6 percent of GDP if global crude oil prices reach US$92 per barrel.

The treasury official said this scenario would only occur if the government does not intervene. Accordingly, the government is opening options to cut spending in several budget lines, one of which is the Free Nutritious Meals (MBG) programme. ‘If we are to prevent that from happening, we will take steps. Where could we cut? For example, savings in MBG,’ Purbaya said in his office on Friday, 6 March 2026.

Purbaya explained that the savings would target expenditures that do not directly support the distribution of food. He cited purchases of motorcycles or computers for the Nutrition Service Delivery Unit (SPPG).

Beyond MBG, other budget items that could be trimmed include the budget of the Ministry of Public Works. ‘For instance, there are expenditures that can be shifted to next year to fund various projects and programmes they have,’ he said.

Purbaya argued that Indonesia would not automatically fall into a crisis if world oil prices reach US$92 per barrel. He noted that world oil prices have previously surged to US$150 per barrel, which led to an economic slowdown. However, the conditions then did not lead to a crisis.

The former head of the Deposit Insurance Corporation (LPS) also said that a rise in fuel prices would be a last resort if global oil prices were too high, thereby burdening the APBN. ‘If the budget is not that strong, and there is no other option, we would share part of it with the public. In other words, there would be an increase in fuel prices (BBM),’ he said.