The Heat Of The Iran-Israel Conflict, Airlangga Plans To Adjust The Fuel Subsidy Budget

JAKARTA - Coordinating Minister for Economic Affairs Airlangga Hartarto said the government would extrapolate or adjust the fuel oil subsidy budget (BBM) due to the heating up of Iran's geopolitical conflict with Israel which has an impact on world oil prices.

According to Airlangga, in addition to the challenges caused by external conditions, Indonesia also faces various challenges from within the country, such as calibrating the subsidy budget, economic growth, inflation rates and interest rates.

"We are also faced with various domestic challenges, especially related to subsidies (BBM). We must re-interpret the budget used and of course we hope that this year we can maintain economic growth," he said after the Halal Bihalal event at the Coordinating Ministry for Economic Affairs, Jakarta, Tuesday, April 16.

Airlangga said that his party will continue to monitor the development of this condition for the next 1-2 months and hopes that world oil prices will continue to stabilize in the future.

"We see what the situation is like in 1-2 months. So if there is no escalation, we hope that the price of oil can be flatten. But if there is an escalation, it will be different," he explained.

Airlangga hopes that global geopolitical conditions will heat up in the Middle East between Iran and Israel soon subside, aka descalation. Even so, the government is still preparing various policies to respond to the global shock.

"We hope that there will be a descalation, but as an office responsible for the economy, we must prepare for various shocks," he said.

Airlangga added that the condition of the Indonesian economy has not yet finished experiencing a global shock due to the Ukraine-Russia war, Israel-Hamas, coupled now with the heated conditions in the Middle East between Iran and Israel, causing the world condition of the cannot afford another war (not able to bear the war anymore).

"We haven't finished globally, the shock of the Ukraine war is still there, Israel-Gaza is still there. The world cannot afford another war (not able to bear the war anymore)," he said.

In a situation like this, Airlangga said that there are several things that are of concern, namely the global interest rate, rising oil prices, higher logistics prices, and also the SBN interest rate.

"We see America, the economic growth is good, then inflation is relatively better even though it is not as low as predicted, so many including the World Bank predict that the US dollar will be higher for longer, it will continue to be high," he said.

Airlangga said that currently the government continues to carry out structural reforms to maintain the economy, one of which is by maintaining capital inflows, so that foreign capital flows can be maintained by maintaining macroprodentials, the economy this year.

"I believe these things will become our common homework in the next 1-2 months, because this is the key in the final year of the presidency of Mr. Joko Widodo and Mr. Ma'ruf Amin. So that we must maintain growth and delivery from PSN can also be achieved at the end of this year. Thus, we must work harder because the world is also not okay," he said.