Jakarta. Indonesia is considering imposing a windfall profit tax on coal producers as part of a broader strategy to keep the state budget deficit below the legal ceiling of 3% of gross domestic product, a senior minister said on Thursday.

President Prabowo Subianto reaffirmed the commitment during a meeting at the State Palace, outlining measures to contain the fiscal gap while strengthening government revenues.

“The president has directed that the budget deficit be maintained below 3%,” Coordinating Minister for Economic Affairs Airlangga Hartarto told reporters after the meeting.

Airlangga said the government would prioritize spending efficiency across ministries and agencies while exploring additional revenue streams, particularly from the coal sector.

Rising global coal prices have created an opportunity to boost state income through export levies and a potential windfall profit tax, he said, adding that the government may revise the 2026 coal production work plan and budget to optimize revenue potential.

Coal producers previously enjoyed significant windfall gains in 2022–2023, driven by a surge in global demand during the post-pandemic recovery and supply disruptions following the Russia–Ukraine war, which pushed prices above $300 per ton. The idea of a windfall tax emerged at the time but sparked debate within industry and policy circles.

More recently, escalating tensions due to US-Israeli strikes on Iran have contributed to renewed increases in global energy prices, lifting coal prices from around $105 per ton in January to above $140.

Indonesia has already introduced a coal export tax of up to 5% this year, targeting revenue of Rp 20 trillion ($1.2 billion).

Beyond revenue measures, the government is also reviewing policies to curb expenditure and reduce energy consumption. One proposal under consideration is a work-from-home scheme for both civil servants and private-sector employees, potentially applied one day per week to cut national fuel use.

The policy would be implemented flexibly, depending on global oil price movements influenced by geopolitical developments, Airlangga said.

The government is also accelerating efforts to convert diesel power plants to solar energy in a bid to reduce reliance on fossil fuels and ease pressure on energy imports.

These measures form part of a broader fiscal strategy to comply with Law No. 17/2023 on State Finance, which mandates a budget deficit cap of 3% of GDP.

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