Indonesia can outlast Mid-East war fallout to year-end: Minister
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People walking past an LCD board displaying stock prices at the Indonesian stock exchange building in Jakarta, Indonesia, on April 13, 2026.
PHOTO: EPA
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JAKARTA – Indonesia’s economy minister said on April 13 that the South-east Asian nation can outlast the impacts of Middle East war-fuelled oil price hikes for as long as 10 months without cutting fuel subsidies.
Minister Airlangga Hartarto told foreign media in Jakarta that his government “is ready for five, six, or even10 months”, based on current projections.
“Diesel, as well as... propellant, will be subsidised until the end of the year,” he said. “And the government has sufficient funds for it.”
Global crude prices have soared to more than US$100 per barrel since the United States and Israel unleashed a series of strikes on Iran on Feb 28, sparking a region-wide conflict and the effective closure of the crucial Strait of Hormuz.
Indonesia is an oil producer, but nevertheless a net importer, and heavily subsidises fuel consumed domestically.
The subsidy covers about 30 to 40 per cent of the cost for consumers and absorbs over 5 per cent – some US$12 billion (S$15.3 billion) – of the annual budget of South-east Asia’s most populous nation and largest economy.
Jakarta’s 2026 fuel subsidy calculation was premised on a global oil price of US$70 per barrel, and the government is legally required to keep the fiscal deficit at no more than 3 per cent of GDP.
Mr Airlangga said on April 13 that every US dollar increase in the global oil price adds a burden of about 6.8 billion rupiah ($505,900) on the state budget.
The country imported between a fifth and a quarter of its oil from the Middle East, but is seeking alternatives in Africa, the USs and Venezuela, he added, though the details were being finalised.
“Some of the other (Middle Eastern) oil can be substituted by these multiple sources,” he said.
Much government planning depends on “how long the war will be”, said Mr Airlangga, and accused US President Donald Trump of “playing yo-yo” with “war and peace.”
In March, the government announced fuel rationing and mandated a day-per-week work-from-home policy for civil servants to conserve energy stocks.
President Prabowo Subianto was in Moscow on April 13 for talks on oil with counterpart Vladimir Putin, for which Mr Airlangga would not give details.
Mr Prabowo is aiming to raise Indonesia’s economic growth rate from 5.1 per cent in 2025 to 8 per cent by 2029, powered by high public spending.
The World Bank last week lowered the country’s 2026 growth projection to 4.7 per cent from 4.8 per cent it had forecast last October.
According to Mr Airlangga, the government expects 5.3 per cent.
He added Indonesia was partly hedged from the global economic fallout from rising commodity exports, listing coal, rubber, nickel, copper and aluminium. AFP
