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View all search resultsIndonesia estimates up to $5.9b needed for extra energy subsidies due to Iran war
Initially, the government budgeted Rp 381.3 trillion (US$22.5 billion) to pay for energy subsidies and also compensate state energy firm Pertamina and utility company PLN for their efforts to keep some fuel prices and electricity tariffs at an affordable level.
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Business as usual: Finance Minister Purbaya Yudhi Sadewa gestures as he speaks during an interview with Reuters in Jakarta on Tuesday, March 3, 2026. (Reuters/Willy Kurniawan)
I
ndonesia estimated that it would need up to Rp 100 trillion (US$5.9 billion) for additional energy subsidies this year due to the impact of the Iran war, Finance Minister Purbaya Yudhi Sadewa said on Wednesday.
Purbaya told reporters that the government has projected a budget deficit of 2.9 percent of gross domestic product for 2026, compared to 2.68 percent in this year's state budget.
Indonesia has budgeted Rp 381.3 trillion to pay for energy subsidies and also compensate state energy firm Pertamina and utility company PLN for their efforts to keep some fuel prices and electricity tariffs at an affordable level.
The budget is based on the assumption that Indonesian crude prices average at $70 a barrel and the rupiah exchange rate averages at Rp 16,500 per dollar in 2026.
Last month, prices jumped to $100 a barrel due to the ongoing Middle East war, which has disrupted shipments and caused an oil supply shock.
Purbaya said on Wednesday that the additional cost would come from spending cuts at some government agencies, but he did not say which ones.
Indonesia announced a slew of measures intended to counter soaring energy prices on Tuesday, including limiting fuel sales and implementing a "work from home" policy for civil servants.
Around Rp 130 trillion of budget savings have been identified to be reallocated as a buffer to protect Indonesia from Iran war shocks, Coordinating Economy Minister Airlangga Hartarto said on Tuesday.
