UMY Expert Recommends Government Budget Cuts Amid Geopolitical Turmoil

Professor of Economics at Universitas Muhammadiyah Yogyakarta (UMY), Prof. Dr. Imamudin Yuliadi, recommends that the government implement budget savings. These savings are advised amid geopolitical turmoil. Imam recommends that the government apply budget efficiency as a short-term solution. He also suggests that the government continue economic stimulus measures. “The government must implement savings in non-priority sectors. However, it must still maintain fiscal impetus to drive domestic economic growth,” stated Imamudin in a written statement received by detikJogja on Tuesday (7/4/2026). Furthermore, Imamudin notes that Indonesia faces two unfavourable choices amid the surge in global crude oil prices triggered by escalating geopolitical conflicts in the Gulf region. “If the government increases subsidies, the budget deficit could potentially swell further. But if fuel prices are raised, the public will be affected. Production costs rise, inflation increases, and already limited purchasing power declines even more,” he explained. Imamudin assesses that the government’s choice not to raise subsidised fuel prices could create problems in covering the widening deficit. Nevertheless, he says, other options also carry their own consequences, such as raising taxes, cutting spending in certain sectors, and restructuring strategic government programmes that have previously been priorities. In addition, the slowing global economy, continued Imamudin, also pressures demand for Indonesian export commodities, thus eroding state revenues from the export sector. Imam also mentions that the weakening of the rupiah exchange rate against the US dollar adds to the burden of foreign-denominated external debt, without needing to add a single penny of new debt. “As soon as foreign currencies strengthen, our debt automatically increases. So now our debt has already risen because our currency has weakened,” he emphasised.