Indonesia’s energy subsidy bill could reach Rp600 trillion–Rp700 trillion
An energy researcher said sustained oil prices above US$100 a barrel and a rupiah at Rp18,000 per US dollar could put pressure on the 2026 budget.
Indonesia could face energy subsidy and compensation costs of Rp600 trillion–Rp700 trillion if average crude prices remain above US$100 a barrel and the rupiah reaches Rp18,000 per US dollar, according to energy researcher Deon Arinaldo. His projection assumes those conditions persist through the end of 2026.
Speaking at the Indonesian Next Generation Journalist Network on Korea workshop on 30 October, Deon, director of the energy system transformation programme at the Institute for Essential Services Reform (IESR), said rising fuel costs and currency depreciation could substantially increase the government’s funding needs.
The 2026 state budget assumes an exchange rate of Rp16,500 per US dollar and an Indonesian crude oil price of US$70 a barrel. The rupiah has reached Rp18,000 per US dollar, while Indonesian crude stood at US$112.81 a barrel in September 2026.
Deon said the government was continuing to shield consumers through subsidies and compensation, including holding Pertalite fuel at Rp10,000 until year-end. He said this protection limited the immediate effect on energy affordability but increased the budget needed to fund that support.
Finance Ministry sensitivity estimates show that every Rp100 weakening against the US dollar adds Rp6.1 trillion to central government expenditure, including energy compensation. Separately, Statistics Indonesia recorded oil and gas imports of US$3.53 billion in August 2026, up 30.73 per cent from a year earlier.
Finance Minister Suahasil Nazara said subsidy and compensation spending was affected by Indonesian crude price movements, the exchange rate and rising volumes of subsidised fuel, LPG and electricity. Presentation materials put subsidy spending at Rp222.5 trillion and compensation at Rp154.4 trillion as of 30 September 2026.
