Jakarta. Indonesia has disbursed Rp 331.4 trillion ($18.67 billion) in subsidies and compensation to state-owned electricity company PLN and oil and gas giant Pertamina as of Aug. 31, 2026, up 52.1% from the same period last year, as the government seeks to maintain purchasing power and ensure the availability of subsidized goods.

The disbursement comprised Rp 177.1 trillion in subsidies and Rp 154.4 trillion in compensation, according to Finance Ministry data.

Finance Minister Suahasil Nazara said the government had shifted to monthly payments for both subsidies and compensation to PLN and Pertamina, providing the companies with more predictable cash flows.

“We have disbursed Rp 331.4 trillion in subsidies and compensation. Compensation is now paid monthly, as are subsidies to PLN and Pertamina,” Suahasil said at a press conference on the September 2026 edition of the state budget performance and facts report (APBN KiTa) in Jakarta on Friday.

The payments are influenced by fluctuations in crude oil prices and the rupiah exchange rate, as well as rising consumption of subsidized fuel, liquefied petroleum gas (LPG) and electricity.

Global geopolitical tensions that drive oil price volatility can also increase energy subsidy spending. Indonesia experienced similar pressures in 2022 following Russia’s invasion of Ukraine.

Meanwhile, non-energy subsidies are primarily affected by higher fertilizer subsidy payments.

The government’s disbursements as of August were Rp 113.4 trillion higher than the Rp 218 trillion recorded in the same period last year, according to the figures provided by the Finance Ministry.

Suahasil said the monthly payment mechanism was intended to give PLN and Pertamina greater financial flexibility to maintain supplies of goods whose prices are regulated by the government.

“This is intended to give PLN and Pertamina greater cash flow flexibility so they can continue providing goods whose prices are regulated by the government, including subsidized goods,” he said.

Subsidized Consumption Rises
Suahasil said higher consumption of subsidized goods indicated that economic activity remained active, pointing to increases in the use of subsidized fuel, LPG, electricity and fertilizer.

The volume of subsidized fuel rose 8.8% year-on-year, while consumption of 3-kilogram LPG cylinders increased 2.6%.

The number of subsidized electricity customers grew 2.1%, while the volume of subsidized fertilizer distributed increased 23.4%. Meanwhile, the number of borrowers under the government’s People's Business Credit (KUR) program rose 5.9%.

“People are using more of the goods that receive subsidies. This shows that economic activity continues,” Suahasil said.

He added that government-regulated prices, supported by subsidies and compensation payments, helped sustain economic activity.

“This is what I mean when I say the economy continues to move. One of the factors supporting it is government-regulated prices, for which we provide subsidies and compensation,” he said.

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