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Sri Mulyani: Indonesia could benefit from G7 price cap on Russian oil
Finance Minister Sri Mulyani said Indonesia would welcome cheaper crude to alleviate pressure on its state budget – if the G7's proposed price cap on Russian oil was passed and if it worked.
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Finance Minister Sri Mulyani (second right) responds to journalists during an interview with ‘The Jakarta Post’ on Oct. 21, 2022 at the Finance Ministry in Jakarta. (Finance Ministry/-)
As Group of Seven (G7) members try to push other countries to join their proposal to impose a price cap on Russian oil, the Indonesian government has indicated it would welcome cheaper crude to alleviate pressure on the state budget.
In an interview with The Jakarta Post on Oct. 21, Finance Minister Sri Mulyani explained that, if the price cap were implemented and proved to be effective, the resulting lower global oil prices could benefit Indonesia.
According to World Bank data, global oil prices were up 21 percent year-on-year (yoy) at around US$88 per barrel in September.
For much of the year, the Indonesian government has relied on subsidies and price controls to isolate the national economy from imported energy inflation to some degree.
To reduce the burden this policy was placing on state finances, however, the government raised the prices of subsidized and nonsubsidized fuels by approximately 30 percent last month.
The United States and several European countries have been pushing a plan through the G7 forum to put a cap on oil bought from Russia, in addition to the many sanctions Western nations have imposed on the country following its invasion of Ukraine on Feb. 24.
“I asked Janet Yellen, ‘What exactly is the cap you are setting, at what level?’” Sri Mulyani told the Post.
