Why has Indonesia maintained subsidised fuel prices amid high costs?

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Indonesia Maintains Subsidised Fuel Prices Despite High Crude Costs

Indonesia has maintained its heavily subsidised fuel prices despite the significant challenges posed by high crude oil costs. This decision comes even as the nation grapples with a weakening rupiah and broader economic volatility.
Government Stance on Fuel Prices

The Indonesian government has explicitly stated its intention to keep fuel prices at their current subsidised levels. This commitment persists despite the escalating costs of crude oil, which typically would necessitate price adjustments to manage import expenses and fiscal pressures.
Economic Context and Challenges

The country is facing considerable economic headwinds, notably a significant depreciation of the rupiah. This currency decline has been exacerbated by "high global volatility," particularly due to events in the Middle East impacting oil prices. The rupiah has fallen to a record low against the US dollar, and the stock market has experienced substantial losses, with the market shedding a third of its value in 2026.
Broader Economic Volatility

The central bank has taken measures, including surprise interest rate hikes, to address currency stability and inflation concerns. These actions are intended to bolster the rupiah and keep inflation within the government's target range. However, these efforts have not fully halted the currency's slide, and broader investor concerns have been amplified by announcements such as commodity export controls, raising questions about resource nationalism.

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Why has Indonesia maintained subsidised fuel prices amid high costs?

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