Commodity Prices Rise, Government Fiscal Space Potentially Widening

Illustration (Photo: Doc. ANTARA)

JAKARTA - Bank Mandiri Head of Macroeconomic & Financial Market Research Dian Ayu Yustina projects that the government's fiscal space will again loosely driven by higher commodity price increases some time ago.

"We are seeing developments, the outlook for commodity prices is higher than the beginning of the year, recently this week there has been an increase. This current can support in terms of revenue," he said in Mandiri Macroeconomic Outlook Tuesday, May 14, 2024.

According to Dian, the factor in rising commodity prices has driven an increase in government revenue.

Some commodities that have again shown an upward trend in prices, namely Crude Palm Oil (CPO), coal, and nickel.

Similarly, Bank Mandiri Chief Economist Andry Asmoro said the price of CPO in 2023 as of May 13, 2024, rose 3.6 percent again to 826.4 US dollars per metric ton.

This condition occurs in the price of coal commodities.

"Coal was previously quite deep (2023), as of May 13, 2024, it fell by only 1.4 percent. So when compared, coal returned to 144.4 US dollars per metric ton," he said.

In addition, Andry said nickel prices also increased 14.3 percent to 18,784 US dollars per metric ton.

While the price of gold rose 13.6 percent to 2,344.4 US dollars per ounce.

Although commodity prices have increased, Andry said, Indonesia also needs to be aware of the increase in world crude oil prices due to uncertain global geopolitical conditions that have the potential to raise world crude prices.

"On the one hand, it provides pressure because Indonesia imports crude oil, especially from a fiscal point of view, the compensation provided will increase," he said.

In addition, Andry said, another factor is the development of food prices due to climate change factors and logistics costs that can make food commodity prices such as rice, beef, chicken meat increase.

Therefore, according to him, mitigation is needed to overcome the increase in food commodity prices, because if there is no mitigation, it will erode people's purchasing power.

"This will erode the purchasing power of lower and lower middle groups, this will be affected by this increase in food prices," he said.