Indonesia Estimates 5.9 Billion Dollars in Extra Subsidies
Indonesia needs 5.9 billion dollars in extra energy subsidies as the Iran war raises oil prices. Officials plan to cut spending to manage the rising deficit.
Indonesia is facing a significant fiscal challenge as the government estimates a requirement of up to 100 trillion rupiah ($5.9 billion) in additional energy subsidies. This surge in spending is primarily driven by the ongoing conflict involving Iran, which has sent shockwaves through global energy markets and disrupted international supply chains.
Finance Minister Purbaya Yudhi Sadewa announced on Wednesday that the government now projects a budget deficit of 2.9% of gross domestic product for 2026, an increase from the 2.68% originally targeted in this year’s state budget. The nation had initially allocated 381.3 trillion rupiah ($22.50 billion) to cover energy subsidies and compensate state-owned energy firm Pertamina and utility provider PLN. These funds are essential for maintaining affordable fuel prices and electricity tariffs across the archipelago.
