Indonesia's oil price is 33% above the 2018 State Budget assumption.

In the 2018 State Budget (APBN), the Indonesian Rupiah exchange rate was pegged at Rp 13,400 per US dollar, while the Indonesian Crude Price (ICP) was set at US$ 48 per US dollar. However, the actual Rupiah exchange rate and oil price deviated significantly from the 2018 macroeconomic assumptions.

As is known, the Rupiah exchange rate on February 28, 2018, reached Rp 13,707 per US dollar, representing a 2.92% weakening from the APBN 2018 assumption. Furthermore, one of Indonesia's benchmark oil prices (Attaka) at the end of last month reached US$ 64.06 per barrel, or 33.46% above the government's assumption.

The weakening Rupiah and rising oil prices will impact state revenue and expenditure. Rupiah depreciation will burden foreign debt payments and US dollar-based expenditures. Meanwhile, the rise in oil prices will increase the energy subsidy budget but could also increase government revenue from the oil and gas sector.