JAKARTA - The government has confirmed that it has no plans to raise the price of subsidized fuel oil (BBM) even though world oil prices have the potential to rise due to global tensions.
Coordinating Minister for the Economy Airlangga Hartarto said the government was still monitoring the development of international oil prices and their impact on the domestic economy.
He added that until now, policies related to fuel prices still refer to the assumption of oil prices in the State Budget (APBN).
According to him, the assumption of the Indonesian Crude Price (ICP) in the current state budget is in the range of 70 US dollars per barrel, so the government is still waiting for market dynamics before taking further policy steps.
"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 told the media, Thursday, March 5.
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.
Airlangga added that the government had prepared mitigation steps, as it had done when the war between Russia and Ukraine triggered a spike in global energy and 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 said.
He explained that the increase in commodity prices has two impacts for Indonesia, on the one hand, the increase in prices can add to the government's subsidy burden and also has the potential to increase state revenues, especially from the commodity sector.
Airlangga added that the government had also prepared a policy to maintain the sustainability of subsidies while utilizing the state budget as a buffer instrument 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.
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