As of February 28, 2026, the Indonesian government has spent Rp51.5 trillion on subsidies and compensation, representing 11.5 percent of the total budget allocated for these measures in the 2026 State Budget (APBN). The spending is driven by factors including fluctuations in Indonesian Crude Price (ICP), the value of the rupiah, and increased demand for fuel, LPG, and electricity.
Rising Costs and Increased Demand
Deputy Finance Minister Suahasil Nazara stated that Rp7.4 trillion of the total expenditure went towards subsidies, while Rp44.1 trillion was allocated for compensation. The government has begun implementing monthly energy compensation payments, designed to act as a buffer against global energy price volatility and protect purchasing power.
Beyond energy, the government is also focused on maintaining the availability of subsidized goods. The distribution of subsidized fuel increased by 11.2 percent, reaching 1,647,900 kiloliters compared to 1,482,200 kiloliters in 2025. Similarly, 3-kilogram LPG distribution rose by 7.5 percent to 740.9 million kilograms.
Increases were also seen in subsidized electricity customers, up 2.2 percent to 42.7 million, and in the agricultural sector, with subsidized fertilizer distribution growing by 16.6 percent to 1.4 million tons. The number of recipients of People’s Business Credit (KUR) also saw a significant increase, rising 42.5 percent from 500,000 to approximately 800,000.
Suahasil Nazara confirmed the government will continue to closely monitor global energy prices and the rupiah exchange rate to ensure these policies remain effective.
Frequently Asked Questions
What factors are influencing subsidy and compensation spending?
Fluctuations in the Indonesian Crude Price (ICP), depreciation of the rupiah exchange rate, and increased volume of fuel, LPG, and electricity consumption are all influencing subsidy and compensation spending.
How much has been spent on subsidies versus compensation?
As of February 28, 2026, Rp7.4 trillion has been spent on subsidies, while Rp44.1 trillion has been allocated for compensation.
Has the distribution of subsidized goods increased?
Yes, the distribution of subsidized fuel, LPG, electricity, and fertilizer has all increased compared to 2025.
Given these ongoing economic factors and the government’s commitment to maintaining affordability, how might future global events impact Indonesia’s subsidy policies?
