Lower oil prices could improve Indonesia's fiscal space: govt

Jakarta (ANTARA) - Lower global oil prices amid easing tensions in the Middle East could provide Indonesia with greater fiscal space, according to Government Communication Agency (Bakom) head Muhammad Qodari.

"We see that Indonesia's fiscal space will become lighter, especially with the decline in global oil prices," Qodari said in Jakarta on Wednesday.

He noted that recent developments involving Iran, the United States, and Israel have raised hopes for global economic stability, although the situation remains dynamic and should be approached with caution.

According to Qodari, lower oil prices are positive news for Indonesia. Global oil prices that previously stood at around US$93 per barrel have now fallen below US$80 per barrel.

Given Indonesia's substantial oil import needs, the decline is expected to reduce government spending and improve the country's fiscal position.

"With Indonesia's import needs at around 1.6 million barrels per day, the savings for the government can certainly be significant. This is good news that we welcome with optimism and it will provide better fiscal space," he said.

Qodari also noted improvements in several economic indicators over the past few days.

The composite stock index has returned to above the 6,000 level, while the rupiah exchange rate has strengthened to below Rp18,000 per US dollar.

He added that Indonesia's economic fundamentals remain strong.

"Our fundamentals were already strong even before this. We have foreign exchange reserves equivalent to more than five months of imports, inflation remains under control, and our foreign debt is below the average of many other countries," he said.

According to Qodari, those solid fundamentals could become even stronger if lasting peace is achieved in the Middle East.

"Indonesia's economic fundamentals are very strong, and they will become even stronger if peace can be achieved in the Middle East," he added.

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Translator: Fathur Rochman, Yashinta Difa

Editor: Anton Santoso

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