Professor Rahmat Gafmi from Airlangga University reported that Indonesia's budget (APBN) continues to show resilience amid the ongoing rise in global energy prices. However, he noted that the government is facing increasing pressures in public finances, necessitating careful measures to maintain financial stability.
In an interview with Antara News Agency, Gafmi confirmed that the budget's resilience is being tested, especially if oil prices continue to rise above $90 per barrel for an extended period. In such a scenario, the government will have to choose between increasing debt or raising fuel prices to ensure the budget does not collapse.
Details of the Situation
Gafmi revealed that the budget deficit has seen a significant increase, recording approximately 240.1 trillion rupiah in March 2026, which is an increase of 140% compared to the same period last year. He explained that this increase requires close monitoring of deficit developments, as the rate of increase exceeds the initial expectations set by the government.
Despite these challenges, Gafmi believes that the government still has the capacity to keep the deficit within safe limits, adhering to the target set at 2.68% of GDP. However, he warned that the deficit could approach the constitutional limit of 3% if oil prices do not decrease or if the government does not adjust fuel prices.
Background & Context
Historically, Indonesia has faced numerous economic challenges, particularly amid global fluctuations in energy prices. These fluctuations have impacted the public budget, prompting the government to implement strict financial measures to maintain stability. In recent years, the government has been striving to balance economic growth while ensuring price stability, which requires a swift and effective response to changing conditions.
In this context, Finance Minister Sri Mulyani Indrawati indicated that the government remains optimistic about maintaining the deficit below 3%, even with rising global oil prices. Financial plans have been developed to consider multiple scenarios, including oil prices rising to $100 per barrel.
Impact & Consequences
The current circumstances demand a flexible political response to ensure budget stability. Gafmi emphasizes the importance of taking precautionary measures to address any potential deterioration in geopolitical conditions that may affect global prices. The government also possesses sufficient financial reserves, including a surplus budget balance, which can be utilized in emergencies.
The government must be prepared to take effective actions, such as enhancing the efficiency of government spending and maintaining the stability of subsidized fuel prices, to safeguard citizens' purchasing power. Given the economic pressures, emergency legislation may be needed to provide additional financial flexibility.
Regional Significance
Indonesia is considered one of the largest economies in Southeast Asia, and any fluctuations in its financial policy could impact regional markets. With rising energy prices, oil-producing Arab countries may be affected, as their economies heavily rely on oil revenues. Therefore, the stability of the Indonesian budget could have indirect effects on Arab markets.
In conclusion, the current situation in Indonesia requires close monitoring and strategic planning to ensure budget stability. The government must take proactive steps to address financial challenges while maintaining economic growth and achieving social stability.