The Sensitivity of the 2020 State Budget to Oil Price Increases

Oil prices remain a crucial factor for the Indonesian government in determining the State Budget (APBN). This is evident in how oil prices consistently serve as one of the macroeconomic indicators assumed in designing the national budget. Any increase or decrease in the Indonesia Crude Price (ICP) will affect the national finances.

In the 2020 draft state budget (RAPBN), a US$1 per barrel increase in Indonesian oil prices would result in a rise in state revenue of between Rp 3.5 trillion and Rp 4 trillion. Tax revenue is projected to increase by Rp 0.9 trillion to Rp 1.4 trillion, while Non-Tax State Revenue (PNBP) is expected to rise by approximately Rp 2.6 trillion.

(Read Databoks: [Inilah Sensitivitas Kenaikan Harga Minyak Terhadap APBN 2018](https://databoks.katadata.co.id/datapublish/2017/12/22/inilah-sensitivitas-kenaikan-harga-minyak-terhadap-apbn-2018))

An increase in oil prices will also trigger higher government spending at the central and regional levels, particularly in oil-producing regions. Total government spending is estimated to increase by between Rp 3.1 trillion and Rp 3.8 trillion. This increase comprises approximately Rp 1.8 trillion to Rp 2.4 trillion in central government spending and Rp 1.2 trillion to Rp 1.3 trillion in funds transferred to regions and villages. As a result, the government budget is projected to have a surplus of between Rp 300 billion and Rp 500 billion.

(Read Databoks: [Berapa Nilai Impor Minyak Mentah dan Minyak Olahan Indonesia?](https://databoks.katadata.co.id/datapublish/2019/05/23/berapa-nilai-impor-minyak-mentah-dan-minyak-olahan-indonesia))