By: Agus Soepomo)*
The government under the leadership of President Prabowo Subianto continues to move quickly in preparing various mitigation efforts to face global economic risks in the preparation of the 2026 Draft State Budget (RAPBN).
Predictions regarding the potential for conflict in the Middle East region that have been made since early 2025 have now been proven accurate. The accuracy of this analysis then encouraged the government to formulate a strategy for carrying out increasingly mature anticipation so that the 2026 Draft State Budget in the future can be a shield for the national economy from global shocks.
Policy Analyst at the Directorate General of Economic and Fiscal Strategy, Ministry of Finance, Wahyu Septia W, views that the observation steps on the occurrence of global risks that have been carried out by the government under the leadership of President Prabowo Subianto since early 2025 are the key to Indonesia’s fiscal readiness when the Israel-Iran conflict breaks out.
The government is not just monitoring geopolitical tensions, but is also directly preparing fiscal risk reserve funds or fiscal buffers through efficiency programs and reallocation of bureaucratic budgets towards productive spending that has a direct impact on the community. This strategy has proven effective in maintaining Indonesia’s fiscal resilience throughout 2025, so that the government is more confident in focusing mitigation in the 2026 Draft State Budget.
Septia explained that the increase in global oil prices which had touched US$78 per barrel was still below the assumption of the 2025 State Budget which set the ICP at around US$82 per barrel with a rupiah exchange rate of Rp16,000 per US dollar.
This condition confirms that the government’s fiscal planning has been carried out anticipatory. However, considering that the Middle East conflict has the potential to be prolonged, the government continues to optimize the State Budget as an economic shock absorber and makes the 2026 Draft State Budget the main instrument for maintaining fiscal stability and people’s purchasing power.
In line with this, the government has rolled out an economic stimulus of Rp24.4 trillion in the second quarter of 2025. The stimulus package includes transportation discounts, toll road tariff cuts, social assistance increases, Wage Subsidy Assistance, and Work Accident Insurance premium discounts for labor-intensive sector workers.
The program is proof that the government prioritizes social protection and people’s purchasing power, while formulating a medium-term fiscal policy in the 2026 Draft State Budget that is more adaptive to global uncertainty.
The Speaker of the Indonesian House of Representatives, Puan Maharani, assessed that accelerating the discussion of the 2026 Draft State Budget with the government is very crucial. The DPR supports the government in immediately mitigating the impact of the Middle East conflict through the 2026 Draft State Budget, especially regarding fuel subsidies and the stability of the rupiah exchange rate.
According to Puan, the heating up of geopolitical conditions has the potential to drastically increase global oil prices, especially if vital routes such as the Strait of Hormuz are completely closed. The spike in oil prices will trigger an increase in the prices of other commodities, including fuel, so the government needs to prepare greater fiscal protection in the 2026 Draft State Budget.
In addition, Puan appreciated the government’s swift move to evacuate Indonesian citizens from conflict areas. He assessed that the government’s accuracy and speed in handling humanitarian risks must be balanced with the accuracy of the preparation of the 2026 Draft State Budget as a national economic mitigation. The DPR encouraged the government to prepare policies that can protect people’s purchasing power from potential inflation due to spikes in global commodity prices.
From the employment sector, Minister of Manpower Yassierli views the Iran-Israel conflict as carrying the risk of a wave of layoffs, especially in export-oriented industries affected by the decline in global demand.
The Ministry of Manpower has prepared a Job Loss Guarantee (JKP) program as part of short-term mitigation. However, Yassierli emphasized that the 2026 Draft State Budget must be part of a medium-term solution by preparing stronger labor protection amid the threat of global recession and geopolitical uncertainty.
Meanwhile, the industrial sector is also the focus of mitigation in the 2026 Draft State Budget. Minister of Industry Agus Gumiwang Kartasasmita emphasized that energy diversification is no longer just rhetoric. The government needs to ensure that the 2026 RAPBN provides full support to the manufacturing industry to produce generating machines and national energy infrastructure, in order to reduce dependence on imported energy that is vulnerable to disruption by global conflict.
Agus views energy not only as a production resource, but also as an important raw material component in the industrial process. Strengthening the domestic energy industry will support Indonesia’s fiscal resilience in the future.
Agus assessed that the government needs to accelerate the downstreaming of domestic agro products as a strategy to restrain the rate of inflation.due to rising international logistics costs and fluctuations in the US dollar exchange rate.
The 2026 Draft State Budget must be able to encourage domestic industries to increase processing of agricultural, plantation, fishery, and forestry products so that Indonesia does not continue to depend on imported food ingredients that are vulnerable to global price fluctuations.
The government’s success in establishing Local Currency Settlement (LCS) with the People’s Bank of China is also an important asset in facing the uncertainty of the rupiah exchange rate amid the Middle East conflict. Bilateral collaboration such as this is expected to be expanded in the 2026 Draft State Budget to support national fiscal and industrial stability.
Mitigating the Middle East conflict through the 2026 Draft State Budget is proof of the government’s seriousness in maintaining national economic stability. With responsive fiscal planning that is pro-people, the government ensures that Indonesia remains resilient in facing the increasingly unpredictable global geopolitical storm. (*)
)*Economic Policy Consultant – People’s Economic Forum
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