ANN/THE STAR – The Indonesian government remains vigilant over the anticipated surge in crude oil prices by the year-end.
The Finance Ministry has indicated its readiness to conduct stress tests if necessary to preempt any potential effects on the state budget, especially concerning energy subsidies.
Analysts at Goldman Sachs, Citigroup, and other institutions forecast that crude oil prices could surpass USD 100 per barrel by 2024.
The projection follows production reductions by Russia and Saudi Arabia, raising concerns about potential ramifications such as slower global economic growth and prolonged high inflation.
The ministry’s Fiscal Policy Agency (BKF) head of central macroeconomics policy Abdurohman said it has carried out some stress tests in the past to measure such impacts to the state budget. The most recent was completed in early 2022 when crude oil prices rose to around USD120 per barrel.
“In January (2022) we did some stress testing to see if the state budget will be impacted significantly by the movement of the oil price,” said Abdurohman.
However, the ministry is yet to determine the possible impacts of the expected oil surge this year.
Abdurohman did not expect this year’s average oil price to touch the USD100 mark as projected by many analysts in the United States.
Given that the new budget was only agreed upon last week, he said that the ministry will not take the move until the start of next year, unless oil prices rise considerably.
By then, Finance Minister Sri Mulyani Indrawati will have ordered her team to work out some scenarios to anticipate the gush using policy, Abdurohman asserted.
The Brent crude oil price rose sharply from USD86 per barrel on August 31 to USD92 a barrel on Tuesday. Sri Mulyani and the House of Representatives adjusted their projection of the country’s benchmark Indonesia Crude Price (ICP) to USD82 per barrel for next year, as seen in the 2024 state budget law that was passed yesterday.
