World Oil Prices Rise, Purbaya Weighs MBG Spending Efficiencies

Jakarta — Indonesian Finance Minister Purbaya Yudhi Sadewa has opened the possibility of efficiency in certain spending components within the Free Nutritious Meals MBG programme if pressure on the State Budget (APBN) grows due to a rise in global oil prices.

He said the government had run simulations for various scenarios of higher oil prices, including a scenario where world oil prices rise to around $92 per barrel over the course of the year. In such a scenario, the APBN deficit could widen if no adjustments are made. However, he stressed that the government would typically take adjustment steps to keep the deficit below the legal ceiling, which is a maximum of 3 percent of Gross Domestic Product (GDP).

One of the options under consideration is to implement efficiency in several spending items, including the MBG programme. However, he emphasised that efficiency would be applied to parts not directly related to providing food to beneficiaries. He cited examples of supporting expenditures that could be evaluated, such as the purchase of equipment or additional facilities that are not directly connected to supplying food under the programme.

Aside from MBG, he noted that adjustments could also be made to ministry spending or to specific development projects if necessary to maintain fiscal health. According to Purbaya, the government has experience facing surges in world oil prices. “At that time the economy did slow, but did not fall. We have experience dealing with situations like that,” he said.

Purbaya added that under certain conditions the government could consider other policy options to maintain fiscal stability, including sharing the burden with the public if pressure on the APBN becomes very large. However, he emphasised that these scenarios are still simulations and the government would first take spending adjustment steps to keep the deficit controlled.