Former President Joko Widodo has praised the current administration’s commitment to maintaining Indonesian fuel price stability, describing the decision to forgo price hikes during a period of extreme global volatility as a “brave” strategic move.
Speaking at an event in Solo on Saturday, the seventh president noted that while many nations have been forced to pass rising energy costs onto their citizens, the government under President Prabowo Subianto has successfully shielded the domestic market. The move comes at a time when crude oil markets are under significant pressure from escalating conflicts in the Middle East and Eastern Europe.
The remarks were delivered during a gathering at Hotel Sunan, which included a first-anniversary celebration for Youtuber Nusantara and a consolidation meeting for Laskar Gibran. Throughout his address, Joko Widodo emphasized that the decision to keep fuel costs flat was not a matter of chance, but rather the result of meticulous planning and a willingness to absorb financial risk at the state level.
A ‘Brave Decision’ Amid Global Volatility
Joko Widodo highlighted a stark contrast between Indonesia’s current energy policy and the trends seen in other countries, where some fuel prices have reportedly surged by 40% to 60%. By keeping prices steady, the administration has avoided the inflationary spikes that typically follow fuel adjustments.
“According to me, What we have is a brave decision, a decision calculated with detailed and mature calculations,” Joko Widodo said, referring to President Prabowo’s approach. “So that bravery caused him to decide not to raise [prices] until today.”
The stability is most evident in the pricing of the nation’s most widely used fuels. According to the former president, Pertalite remains at Rp10,000 per liter, while Pertamax continues to hover between Rp12,400 and Rp12,500. These figures are critical for maintaining the purchasing power of millions of Indonesians who rely on subsidized and non-subsidized gasoline for daily transport and logistics.
| Fuel Type | Current Price (Approx.) | Status |
|---|---|---|
| Pertalite | Rp10,000 / liter | Stable |
| Pertamax | Rp12,400 – Rp12,500 / liter | Stable |
| Global Crude Oil | $108 – $112 / barrel | Increasing |
Geopolitical Pressures and the Oil Market
The praise for the current administration is framed against a backdrop of severe geopolitical instability. Joko Widodo pointed to a convergence of conflicts—specifically the ongoing war between Russia and Ukraine, the crisis between Israel and Palestine and the escalating tensions between the U.S.-Israel alliance and Iran—as the primary drivers of market uncertainty.
He noted that based on his observations, global oil prices had climbed significantly, reaching between US$108 and US$112 per barrel as of Friday afternoon, a sharp increase from previous levels of US$60 to US$70 per barrel. This volatility creates a precarious environment for oil-importing nations, where sudden price jumps can destabilize national economies.
“I know the Russia and Ukraine war is not over, added Israel with Palestine is not finished, and now Israel-US with Iran, which causes world uncertainty, and makes all countries dizzy facing this uncertainty,” he said.
To maintain this stability, the Indonesian government must rely heavily on the State Budget (APBN) to fund subsidies. Joko Widodo acknowledged that while this protects the public, it places a significant burden on the national treasury, essentially using the budget as a shock absorber to prevent domestic inflation.
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The ‘Three Big Challenges’ Facing the Nation
Beyond the immediate concern of energy costs, the former president used the occasion to outline a broader vision of the threats currently facing Indonesia and the global community. He identified three systemic disruptions that require urgent attention and strategic resilience:
- Climate Change: The ongoing environmental crisis that threatens food security and infrastructure.
- Geopolitical Tensions: The instability caused by regional wars and shifting global alliances.
- Technological Disruption: The rapid rise of Artificial Intelligence (AI) and Humanoid Robotics, which he noted are fundamentally altering the nature of work and society.
By linking fuel price stability to these larger challenges, Joko Widodo suggested that the government’s ability to manage the energy crisis is a litmus test for its ability to navigate a world defined by unpredictability.
Budgetary Risks and Future Outlook
While the current stability is a win for consumers, economists often warn that prolonged subsidies can lead to budget deficits. Joko Widodo did not shy away from this reality, noting that the government is operating under the risk of APBN pressure. He expressed hope that the budget remains capable of absorbing the costs, though he admitted that the timeline for the resolution of the global conflicts driving these prices remains unclear.
The sustainability of this policy will likely depend on the government’s ability to balance social stability with fiscal discipline. If global crude prices remain above the $100 mark for an extended period, the pressure on the state budget may force a reconsideration of subsidy structures.
The next critical checkpoint for energy policy will be the upcoming quarterly budget review, where the Ministry of Finance is expected to assess the impact of energy subsidies on the overall deficit and determine if current funding levels are sustainable through the next fiscal cycle.
Do you think the government should continue to prioritize price stability over budget deficits? Share your thoughts in the comments below.
