Minister of Finance Purbaya: Middle East conflict is a big challenge for the APBN and the Indonesian economy

Minister of Finance Purbaya Yudhi Sadewa. (Photo: ANTARA)

JAKARTA - Minister of Finance Purbaya Yudhi Sadewa said that the conflict between the United States, Israel, and Iran is a major challenge for the State Budget and Expenditure (APBN) and the Indonesian economy.

He explained that in the midst of increasing global uncertainty due to the escalation of geopolitics and pressure on world economic activity, Indonesia's economic stability has so far been maintained.

Purbaya added that various external pressures come and go, ranging from global market dynamics to conflicts in the Middle East.

According to him, the Indonesian economy has the potential to weaken if it is not managed carefully and one of the main risks comes from disruptions in energy supply which force many countries to raise the price of fuel oil (BBM).

"This war in the Middle East is a very significant challenge for the state budget and our economy. So if we don't manage it well, we may have the same fate as the countries around us who have experienced a significant economic slowdown, because they are forced to raise fuel or fuel supplies that are not available in the market," he said in a working meeting with Commission XI of the Indonesian House of Representatives, Monday, April 6.

However, he said that various indicators showed improvements in the performance of the domestic economy, and this was a signal that Indonesia's economic conditions were still quite strong in the face of global pressures.

"So there is indeed a real improvement in the economy," he added.

He added that the Ministry of Finance would continue to monitor the development of the situation intensively, and if there were indications of economic weakness, policy adjustment measures would be taken immediately.

"We will continue to monitor this situation, if there is a weakening (economy), we will fix it as soon as possible. So the Ministry of Finance has implemented an early warning system that is sufficient for our economy," he said.

In addition, Purbaya said, the government also monitors various economic indicators periodically, including business and industrial activities reflected by sales in the real sector.

"These various indicators show that economic activity is moving strongly supported by business activities and domestic consumption," he explained.

He added that in an effort to maintain the momentum of growth, the government strengthened the synergy between fiscal and monetary policies, one of the steps taken was the placement of funds in banks to increase liquidity in the financial system.

However, Purbaya said, the government remained cautious not to trigger economic overheating, so that all policies would continue to be evaluated periodically.