Indonesia absorbs global oil price surge, but budget and trade gaps widen

Statistics Indonesia data reveal that Indonesia’s oil-and-gas import bill surged 40.2% year-on-year to US$25.8 billion in the first seven months of 2026, far exceeding the 10.9% rise in volume. Government subsidies and compensation, amounting to 331.4 trillion rupiah, were increased by 52.1% to protect consumers from higher fuel prices. The oil-and-gas trade deficit widened by 78.2% to US$18.8 billion, and one outlet-account deficit grew to US$12.5 billion in Q2, pressuring the rupiah and limiting monetary-policy flexibility.

Higher prices for coal and palm oil, Indonesia’s major export commodities, helped cushion the fiscal impact. Economists note that while the subsidies preserve household purchasing power, they shift the burden to the fiscal balance and external accounts, though they do not yet threaten fiscal sustainability.