Indonesia says won’t raise fuel price despite Mideast war pressures
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The fuel subsidy calculation for 2026 is based on US$70 per barrel, but global oil price has since topped US$100.
PHOTO: AFP
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JAKARTA – Indonesia said on March 31 it would not increase fuel prices despite rising budget pressures from the war in the Middle East.
A government statement sent to AFP said there would be no increase “for subsidised or non-subsidised” fuel from April 1, and urged citizens not to panic in reaction to “misinformation” being spread about a pending price hike.
“We hope that the public will not panic or feel anxious because we guarantee the availability of fuel. We guarantee it. And there is no price adjustment,” it quoted presidential spokesman Prasetyo Hadi as saying.
Indonesia, an oil producer, is nevertheless a net importer and heavily subsidises fuel and natural gas for domestic consumers.
The government has doggedly defended the subsidy, which at US$12.3 billion (S$15.86 billion) represents about 5 per cent of the total annual budget for 2026.
But observers say its hand may eventually be forced, given that Indonesia is required by law to keep its fiscal deficit under 3 per cent of gross domestic product.
The 2026 fuel subsidy calculation was premised on a global oil price of US$70 per barrel, but prices have since topped US$100.
Mr Prasetyo insisted on March 31 that “the government guarantees the availability of fuel for the public at affordable prices”.
Previous fuel price hikes have resulted in mass riots in Indonesia.
Unlike many of its neighbours, South-east Asia’s biggest economy has not seen long fuel queues as global oil prices have soared.
On March 29, the government announced a one-day-per-week cut to its free school meals plan, though not for areas with high malnutrition rates.
More measures are expected to be announced later on March 31.
Earlier in March, Mr Prasetyo said the government was seeking to find savings of up to 80 trillion rupiah (S$6.06 billion).
Measures under consideration include ordering government workers to work from home one day per week, cutting back on official travel, and encouraging bicycle, electronic car and public transport use to preserve fuel.
Indonesian President Prabowo Subianto seeks to raise the economic growth rate from 5.1 per cent in 2025 to 8 per cent by 2029, powered by high public spending. AFP
