Indonesia uses state budget to absorb oil price shocks

Indonesia will utilize its state budget to absorb the financial impact of rising global oil prices, according to the nation's finance minister. The government has allocated 381.3 trillion rupiah, approximately $22.50 billion, to maintain energy subsidies and compensate state energy firm Pertamina and utility provider PLN. These funds are intended to keep fuel and electricity costs affordable for the domestic market despite global price volatility.

The current budget was formulated based on the expectation that Brent Crude Oil would average $70 per barrel. However, market prices surged past $100 per barrel on Monday, driven by supply concerns related to ongoing conflict in the Middle East. Simultaneously, the Indonesian rupiah weakened to a record low of 16,990 per dollar as investors moved toward safe-haven assets.