Indonesia Delays Fuel Price Hike Amid Oil Price Volatility

Indonesia has decided to postpone the increase in subsidized fuel prices despite ongoing oil price fluctuations triggered by the conflict in Iran, according to Jin10. Finance Minister Purbaya warned that any price hike could undermine economic growth and threaten social stability. The government plans to rely on a package of fiscal measures, including a 10% cut in spending across ministries and a potential new export tax on coal, to absorb the impact while keeping the deficit within the legal limit. Purbaya stated, "If we remove subsidies, inflation will rise, capital costs will increase, and street protests will escalate, significantly dragging down economic growth. This is a highly risky policy. Therefore, under current conditions, we choose to prevent this scenario." Indonesia can sustain an average oil price of around $100 per barrel for the year while maintaining the budget deficit at approximately 2.9% of GDP, slightly below the legal cap. This fiscal limit has become a focal point for international investors and rating agencies. Recently, Moody's and Fitch Ratings have downgraded the country's credit rating outlook.