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View all search resultsIndonesia’s oil shock response is a matter of a communication failure
Indonesia’s response to the 2026 oil shock is technically sound but narratively broken, leaving sound fiscal moves overshadowed by visible costs. To bridge this gap, the government must move beyond policy design and master the art of transparent, integrated communication to reclaim its credibility.
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Save the energy: Motorists queue to refuel their motorbikes on April 1, at a gas station in Jakarta. The government has begun enforcing newly announced austerity measures, including a mandatory weekly remote working policy, aimed at cushioning the impact of the United States-Israeli war on Iran. (AFP/Bay Ismoyo)
T
he government’s response to the 2026 oil price shock has been widely debated—and often criticized—as fiscally risky, overly interventionist or insufficiently reformist. Yet a closer look reveals a more nuanced reality: many of the policies long advocated by economists and public policy experts are, in fact, already being implemented. These include maintaining fiscal anchors, improving subsidy targeting, diversifying financing strategies and initiating demand- and supply-side energy measures.
This duality is not a lack of sound policy, but a systematic misreading of it. At the core is a deeper problem: weak policy communication. This is not merely a matter of messaging, but a structural failure in how policy is framed, sequenced and communicated, one that ultimately undermines its credibility.
To understand this, consider the substance of the government's actions. On fiscal policy, the government has held firm to its commitment to keep the deficit within the statutory ceiling of 3 percent of Gross Domestic Product, even as oil prices surge. This underscores a clear prioritization of macroeconomic stability and debt sustainability. Regarding subsidies, the government has not only expanded spending but also strengthened targeting through digital monitoring systems, restrictions on fuel purchases and clearer eligibility criteria.
On financing, the government has pursued prudent debt management by diversifying funding sources and deepening the domestic bond market. Simultaneously, on energy policy, it has combined short-term stabilization with longer-term objectives of diversification and electrification. Taken individually, each of these measures aligns closely with what analysts have recommended. Together, they constitute a coherent, if necessarily complex, policy response.
Yet this coherence is not what the public, or even many observers, see. The dominant narrative is instead driven by a narrow set of visible measures: fuel price controls, rising subsidies and fiscal outlays. As the most tangible and politically salient elements of the policy mix, they are easy to interpret and criticize. In the absence of a clearly articulated overarching framework, these elements become proxies for the entire policy stance.
This is where communication breaks down. The government has not clearly narrated its response as a sequenced strategy linking short-term stabilization to medium-term consolidation and long-term reform. Without this narrative, complementary policies appear contradictory. For example, holding fuel prices constant while claiming fiscal prudence seems inconsistent unless accompanied by a clear plan for managing the resulting fiscal pressures.
Moreover, the communication gap is reinforced by the failure to make “invisible policies” visible. Critical measures, such as debt management, tax administration and financial market deepening, remain confined to technical circles and absent from public narratives. As a result, perceptions are skewed: the visible dominates the invisible, and short-term costs overshadow long-term benefits.
