Indonesia to keep subsidized fuel prices unchanged through end-2026

By Cepi Setiadi

The government will maintain subsidized fuel prices through the end of 2026, citing sufficient fiscal capacity despite potential pressure from higher global oil prices.

Finance Minister Purbaya Yudhi Sadewa said the government will continue allocating fuel subsidies in the state budget and does not plan to remove them.

“With regard to subsidized fuel prices, the subsidy will not be removed and will remain in place until the end of 2026,” he said during a press conference in Jakarta on Monday.

The government has modeled scenarios including crude oil prices averaging $100 per barrel, and expects to keep the fiscal deficit at around 2.9% of gross domestic product through spending efficiency measures.

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“With various exercises, including cost-cutting measures, we can ensure the deficit remains around 2.9%. Therefore, subsidized fuel prices will not increase through the end of the year and our budget is sufficient,” he said.

Purbaya said the government also has a fiscal buffer of Rp420 trillion (about $24.7 billion) in its budget surplus balance (SAL) to manage potential shocks.

“If needed, we still have a fiscal buffer of Rp420 trillion. However, the likelihood of oil prices staying above $100 per barrel for an extended period appears low,” he added.

He urged the public not to speculate on the country’s fiscal condition, saying the government has calculated the cost implications of its policies.

“There is no need for the public to worry or speculate that the government is running out of funds. Our budget is sufficient,” he said.

Editing by Alexander Ginting