Rising Oil Prices Strain State Budget, Says MPR Deputy Chair Eddy Soeparno
Jakarta — In response to scenarios indicating that the state budget deficit could breach 3.18–4 per cent owing to increased fiscal pressures from surging oil and gas prices as outlined by the Coordinating Minister for Economic Affairs Airlangga Hartarto, Eddy Soeparno, Deputy Chair of the People’s Consultative Assembly (MPR) representing the PAN faction, expressed his confidence that the government’s economic team will find appropriate solutions without burdening the public.
He commended the swift actions of the government’s economic team, which has projected the impact of the Middle East conflict on the economy and the state budget deficit for 2026.
“Since the outbreak of the Middle East conflict, I have emphasised the importance of vigilance in anticipating surging oil and gas prices, Rupiah depreciation, and disruptions to imported fuel supplies. Fiscal resilience and reliable fuel supply are crucial for Indonesia to safely navigate this highly disruptive geopolitical volatility,” Soeparno said in a press statement on Sunday.
“We currently face several difficult choices: tightening our belts by temporarily cutting certain government-funded activities, or securing new loans to cover the widening state budget deficit.
“The first option appears more feasible to implement quickly, provided that budget cuts do not hamper economic growth. This means the government must continue providing social protection such as direct assistance, cash transfers and electricity subsidies for users with 450 and 900 kilowatt capacity to maintain public purchasing power.”
“The second option is also available, though with Indonesia’s credit rating under pressure, the cost of new borrowing will certainly increase,” he added.
Looking ahead, this University of Indonesia political science doctorate holder expressed optimism that government policy will always prioritise public resilience and purchasing power when facing economic contraction from prolonged conflict.
“We gained experience managing Covid-19 whilst ensuring citizens’ basic needs were met during economic slowdown. Given our limited fiscal space, the government’s economic team must urgently establish priorities for state budget allocation to ensure every Rupiah spent drives economic growth,” he said.
Soeparno concluded by urging anticipatory measures and early solutions for potential energy supply disruptions and logistical chain breakdowns.
“Various countries’ efforts to secure domestic energy and food supplies require Indonesia to do the same. The priority is achieving supply reliability rather than mere availability, and in the future, strengthening Indonesia’s energy resilience through accelerated energy transition and increased domestic oil and gas production,” said this member of the House of Representatives’ Commission XII.