Indonesia minister says sustained high oil prices could see budget deficit breach mandated limit

Indonesia could also impose additional taxes on nickel, gold, and copper. Read more at straitstimes.com.

JAKARTA – Indonesia’s senior economic minister said on March 13 that the country may impose additional taxes on certain commodities, such as palm oil, if the government needs to reduce the impact on the budget from rising global oil prices.

Mr Airlangga Hartarto, speaking at a briefing of the national cabinet, said Indonesia, a global commodities powerhouse and the world’s largest producer of palm oil and nickel, could also impose additional taxes on nickel, gold, and copper.

At the briefing, Indonesian President Prabowo Subianto said austerity measures could be taken to reduce the impact of rising global oil prices.

Mr Airlangga said government modelling showed that if the Iran war caused oil prices to stay high, it would be difficult to keep the fiscal deficit under a legal mandate of 3 per cent of GDP without cutting spending or reducing economic growth.

“These are scenarios we may have to discuss,” he said, and spoke about the option to issue an emergency order if the deficit limit needed to be breached.

He said the government had forecast three scenarios to predict how the Middle East war could impact South-east Asia’s largest economy.