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Geopolitics, climate change pose risks to fiscal stability, Mari Pangestu says
A former trade minister and World Bank director has cautioned Indonesia to look ahead and anticipate potential global disruptions that could affect the country's fiscal stability.
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Mari Elka Pangestu, a former trade minister and the World Bank’s former managing director of development policy and partnerships, speaks on Dec. 7, 2023 at the 12th Annual International Forum on Economic Development and Public Policy (AIFED) in Nusa Dua, Bali.
(Finance Ministry/-)
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eopolitics and climate change pose risks to fiscal stability in Indonesia by disrupting global markets, according to former trade minister and former World Bank managing director Mari Elka Pangestu.
Speaking on Tuesday at the BNI Investor Daily Summit 2024, Mari emphasized that climate-related issues could affect food and energy sectors, cause natural disasters, disrupt domestic supply chains and ultimately impact the country’s fiscal stability.
“Banks are already facing increasing pressure from climate risk assessments and ESG [environmental, social and governance] requirements. If Indonesian companies want to remain competitive, they need to be part of the global supply chains,” she noted.
Read also: Indonesia warns against large-scale war after Iran attacks Israel
Mari further warned that escalating geopolitical conflicts and rising oil prices could see a repeat of the commodity price shocks that occurred in 2022.
Following the outbreak of the Russo-Ukrainian war that year, traders feared that Western sanctions could hit Russian energy exports and the Brent crude benchmark hit almost US$130 a barrel, the highest price since 2008.
“The most recent conflict, Israel’s invasion, has pushed oil prices up to almost $80 in just a few weeks. With Indonesia still heavily subsidizing fuel, this will hit us fiscally,” she said.
