JAKARTA (Reuters – Indonesia has a strong fiscal situation due to high global commodity prices. But, as the government continues to maintain stable fuel prices, inflationary pressures will continue to affect the budget, according the minister of finance.

Indonesia is a net oil importer and Pertamina, the state-owned energy company has managed to keep fuel prices unchanged despite a rise in global oil prices as a result of war between Russia and Ukraine.

Also, the country left unaltered electricity tariffs for householders and liquefied petroleum gasoline prices.

However, it is still not clear how much price stability costs. The latest budget report only covered two months in 2022. Due to the strong collection of revenue, it showed a 19.7 trillion ruble ($1.37 million) surplus.

That is in comparison to the 63.3 trillion rupiah shortfall during the same time period last year.

Sri Mulyani indrawati, Finance Minister, stated that while our current budget is positive on the one hand, the budget must work harder to safeguard the community from shocks resulting from commodities prices. She also said that expenditures, particularly for subsidies, would rise.

This year, the largest economy in Southeast Asia allocated 134 trillion Rupiah to support energy subsidy programs. The country spent 21.7 trillion Rupiah between January and February.

In addition to subsidy payments, Pertamina or the state power utility PLN are usually compensated by the government for certain sales losses.

Sri Mulyani stated that the government still owes Pertamina, PLN 109 trillion rupiah as compensation starting in 2020.

In a separate development, Pertamina’s chief executive Nicke WIDYAWITI told parliament Monday that the demand for sub-subsidized diesel fuel will reach 16,000,000 kilolitres by this year. That figure is 14% higher than the quota. It was due to increased economic activity and targeted subsidies in an environment of widening price discrepancy.

Nicke indicated that Pertamina might also be interested in buying Russian crude “at an attractive price”.

($1 = 14,362.0000 rupiah)