JAKARTA - Coordinating Minister for Economic Affairs Airlangga Hartarto spoke out regarding the increasing tension of the conflict in the Middle East region which has the potential to affect fluctuations in global energy and commodity prices.
Airlangga said the government had prepared mitigation measures, as it had done during the war between Russia and Ukraine which had triggered a spike in oil and world commodity prices.
"Yes, we have experienced it during the Ukrainian war and at that time the oil price rose high and the commodity price rose high," he told the media, Thursday, March 5.
He explained that the increase in commodity prices has two sides for Indonesia, on the one hand, the increase in prices can add to the government's subsidy burden, but on the other hand it has the potential to increase state revenues from the commodity sector.
Airlangga added that the government had prepared policies to maintain the sustainability of subsidies while utilizing the State Budget (APBN) as a buffer to dampen price fluctuations.
However, Airlangga considered it was too early to determine how much the global conflict would impact the domestic economy.
"But we certainly see that the situation is still too early to call, it's still too early," he said.
Regarding the potential increase in world oil prices that could affect the assumptions of the Indonesian Crude Price (ICP) in the State Budget, Airlangga said he was still monitoring the development of the situation.
He emphasized that the ICP assumption in the current state budget is in the range of 70 US dollars per barrel so that the government is still waiting for market dynamics.
Meanwhile, regarding the possibility of adjusting the price of subsidized fuel oil (BBM) if the price of oil continues to rise, Airlangga said that until now there has been no plan in that direction.
"Not yet (raising the price of subsidized fuel). Our state budget yesterday, what is it called, at 70 US dollars per barrel of ICP. So we'll just wait," he explained.
He added that the duration of the global conflict was difficult to predict, it could last several months to longer, so the government prepared various scenarios of anticipation.
"Until when, the war can be 3 months, it can be 6 months, it can be more. So we each have a scenario," he explained.
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