Commodity Prices Are Increasingly Moderated, Government Anticipates Adverse Effects to the Economy

JAKARTA – The government through the Ministry of Finance (Ministry of Finance) continues to study the dynamics of global commodity prices on their impact on the national economy.

Deputy Minister of Finance (Wamenkeu) Suahasil Nazara said that commodity prices, especially food and energy, had fallen but still tended to fluctuate.

"We must continue to be alert to this situation," he said while attending a working meeting with Commission XI of the House of Representatives (DPR) on Thursday, August 31.

Suahasil explained that the state revenue sector was quite helped through exports of crude palm oil (CPO) and coal commodities, whose prices are currently slumping. Deputy Sri Mulyani noted that the price of CPO fell by 10.2 percent year to date (ytd) to 821.7 US dollars per ton.

In fact, coal contracted further by minus 63.1 percent ytd to a level of 149 US dollars per metric ton. Likewise, the price of natural gas fell 39.4 percent ytd and crude oil (Brent) fell 1.8 percent ytd.

"This has implications. "We have to be really aware of state revenues and how this condition has an effect on the national economy," he said.

Just so you know, in 2022 there was a surge in commodity prices which boosted state revenues. However, on the other hand, the government also has to pay extra for fuel subsidies because the price has also gone up.

VOI noted that last year's subsidy/compensation value soared from the previous IDR 152.5 trillion to IDR 502.4 trillion. In fact, on one occasion this week, the Minister of Finance Sri Mulyani said that subsidies could increase to IDR 700 trillion if fuel prices are not adjusted in September 2022.

"This fluctuation is very important for us to be aware of," continued Suahasil.