Weak Rupiah Could Push Energy Subsidies and Compensation to Rp700 Trillion
Jakarta, CNBC Indonesia – Deon Arinaldo, Director of the Energy System Transformation Programme at the Institute for Essential Services Reform (IESR), said the weakening rupiah and rising crude oil prices could put pressure on the 2026 state budget.
He forecast that if average oil prices remain above US$100 a barrel and the rupiah reaches Rp18,000 per US dollar, energy subsidy and compensation spending could surge to Rp600 trillion–Rp700 trillion, provided these conditions persist until the end of the year.
“There are two pressures occurring at the same time: rising fuel prices and depreciation of the rupiah. Both factors could significantly change the level of subsidies and compensation that the Indonesian government needs to provide,” Deon said at the Indonesian Next Generation Journalist Network on Korea workshop on Friday (30 October 2026).
Indonesia is among the countries that still import energy commodities, including crude oil and fuel. Statistics Indonesia (BPS) data show that oil and gas imports were worth US$3.53 billion in August 2026, a year-on-year increase of 30.73%.
Deon stressed that the large potential cost stems from the government continuing to provide subsidies and compensation to the public. For example, the government is keeping the price of Pertalite, a subsidised fuel under the Special Assignment Fuel category (JBKP), at Rp10,000 until the end of the year. The price remains capped even though the rupiah and oil prices have moved well beyond the 2026 state budget’s macroeconomic assumptions.
In the 2026 state budget, the government set an exchange-rate assumption of Rp16,500 per US dollar and an Indonesian Crude Price (ICP) assumption of US$70 a barrel. The rupiah has now reached Rp18,000 per US dollar, while Indonesia’s crude oil price stood at US$112.81 a barrel in September 2026.
The Ministry of Finance has also set out the sensitivity of the 2026 budget. Every Rp100 depreciation against the US dollar is expected to add Rp6.1 trillion to central government expenditure, including energy compensation.
“Although these price increases do not directly affect energy affordability in Indonesia because of government subsidies and compensation, they have an immediate effect on the size of the state budget that must be allocated to fund them,” he said.
“Therefore, I am not sure what strategy Indonesia should pursue. Perhaps Indonesia will have to rely on a little luck and hope the current crisis ends soon, so that budgetary needs remain within the allocations that have been set,” he added.
September 2026 outturn
Finance Minister Suahasil Nazara said that subsidies and compensation totalled Rp376.8 trillion by the end of September 2026, equivalent to 84.3% of the allocation in the state budget.
The figure was higher than for the same period last year. The data were presented in the September 2026 edition of the APBN KiTa report at a press conference on Friday (9 October 2026).
“Subsidies and compensation paid amounted to Rp378.8 trillion, or 84.3% of the state budget. Subsidies and compensation in 2026 as of September were higher than in September last year,” Suahasil said.
According to the presentation, as at 30 September 2026, the outturn comprised Rp222.5 trillion in subsidies and Rp154.4 trillion in compensation. In the same period last year, the total was Rp244.6 trillion, comprising Rp176 trillion in subsidies and Rp68.6 trillion in compensation. This represents growth of 54.1% year on year.
The Finance Minister said subsidy and compensation spending was affected by three factors: fluctuations in the Indonesian Crude Price (ICP), the rupiah exchange rate, and increased volumes of subsidised fuel, LPG and electricity.