Indonesia eyes $6 billion in savings to cushion economy from Middle East war impact
Sign up now: Get insights on Asia's fast-moving developments
Indonesia is also mulling fuel-saving measures, such as one day of remote working per week for government and certain public sector workers.
PHOTO: AFP
JAKARTA – Indonesia is eyeing up to 80 trillion rupiah (S$6 billion) in savings to cushion its economy from the fallout of the war in the Middle East, according to the government.
South-east Asia’s largest economy is also mulling over fuel-saving measures, such as one day of remote working per week for government and certain public sector workers, as the US-Israeli attack on Iran and Tehran’s retaliatory response in the Gulf have sent global oil prices soaring.
In an interview recorded last week, President Prabowo Subianto was asked about a possible shift in budget priorities for the country, which heavily subsidises fuel for its population of just over 284 million.
He said the government was making every effort to cut costs by curbing energy consumption and boosting the production of renewables, mainly solar power.
During the interview, presidential spokesman Prasetyo Hadi suggested that the government is seeking savings of 80 trillion rupiah – a number confirmed to AFP by the presidency on March 23. Mr Prasetyo did not elaborate on where the money would come from.
The government has repeatedly insisted that Mr Prabowo’s signature free meals programme – budgeted at US$19.7 billion (S$25 billion) for 2026 – will remain untouched.
It has so far staunchly defended its fuel subsidy, which covers about 30 per cent to 40 per cent of the cost for consumers and represents around 15 per cent of the budget.
These form part of Mr Prabowo’s goal to raise the economic growth rate from 5.1 per cent in 2025 to 8 per cent by 2029, fuelled by public spending.
Unlike many of its neighbours, Indonesia has not yet seen long fuel queues as global oil prices have soared.
“There are still many other cost-saving measures that we can implement,” Mr Prabowo said in an interview with journalists and experts aired by the local media over the weekend.
The government will finalise its work-from-home policy and announce it as soon as possible, Mr Prasetyo said. AFP
