JAKARTA, March 16 — Indonesia is drafting a budget efficiency plan for several ministries and agencies as part of efforts to keep the 2026 State Budget (APBN) deficit below the three per cent threshold amid rising global oil prices.
ANTARA news agency reported Finance Minister Purbaya Yudhi Sadewa as saying that the Finance Ministry is preparing the measure while monitoring the potential impact of energy price increases linked to geopolitical tensions involving Iran, the United States, and Israel.
“If fuel prices continue to rise, the first step will be efficiency,” he said.
Before this, Coordinating Economic Minister Airlangga Hartarto said Indonesia might struggle to keep its budget deficit within the legal ceiling of three per cent of the gross domestic product (GDP) if global oil prices surge due to prolonged geopolitical tensions, potentially forcing the government to consider extraordinary fiscal measures.
Purbaya added that the efficiency measures would mainly target Additional Budget Allocations in ministries and agencies, which had contributed to swelling expenditure and could potentially be trimmed.
“Additional programmes will be postponed until conditions allow. But right now it is clearly not possible, so we are focusing on the existing budget,” he said.
The Finance Ministry will determine initial steps ministries and agencies can take to prepare their efficiency plans, with preparations expected to take about a week.
“But that does not necessarily mean immediate execution. If cuts are needed, we will determine which areas should be reduced. They will then adjust their policies based on the reductions set by the Finance Ministry,” Purbaya said.
The government has no immediate plans to issue a Government Regulation in Lieu of Law (Perppu) to widen the deficit limit of the 2026 APBN, as the fiscal position remains secure for now.
“So far, there is no indication of that, because the budget is still safe. If oil prices remain high for a prolonged period, we will recalculate the budget's condition.
"But it will not immediately lead to a Perppu,” he said.
The minister noted that President Prabowo Subianto has opened the possibility of adjusting the deficit if the country faces a crisis, although Indonesia’s economy currently remains at a normal level.
“For me, the indicator of a crisis is when the economy enters a recession. If the global economy is also in recession and there is no way to restore growth, then that would be a crisis.
“We are not in a crisis; the economy is still good, and spending continues. However, we must prepare well-considered measures so that when they are needed, we can implement them properly,” he said.
Under Law No. 17 of 2003 on State Finance, Indonesia sets the APBN deficit ceiling at three per cent of GDP.
The government temporarily suspended the rule during the COVID-19 pandemic through Perppu No. 1 of 2020, allowing the deficit to widen to more than six per cent of GDP before it was gradually reduced in subsequent fiscal years.
