‘Israel’s attacks on Iran pressure Indonesia’s economy’
Academic says rising crude prices translate swiftly into higher fuel subsidies
JAKARTA, Indonesia (MNTV) – -The spike in global oil prices following Israel’s attacks on Iran has sent shockwaves through energy-importing nations like Indonesia, reports Indonesia Business Post.
Indonesia’s heavy reliance on imported oil means that rising crude prices translate swiftly into higher fuel subsidies. The government now faces a dilemma: maintain consumer fuel prices and absorb the fiscal blow, or pass the burden onto the public by raising fuel prices − a politically risky move with inflationary consequences.
It has placed immense pressure on Indonesia’s budget and threatens inflation and currency stability, an expert says.
“This is not just a price shock. It’s a direct threat to our economic resilience,” said Syafruddin Karimi of Andalas University. “Indonesia’s energy subsidies will balloon, widening the current account deficit and forcing the government to choose between raising fuel prices or slashing development spending,” Karimi said.
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