TEMPO.CO, Jakarta - The Indonesian Finance Ministry continues to monitor the escalating tensions between Iran and Israel. Deni Surjantoro, Head of the ministry's Communication and Information Service Bureau, confirmed that the government has prepared several mitigation measures to buffer the country from the conflict's impact.
The Iran-Israel conflict has persisted for seven days, with mutual attacks continuing until Thursday morning, June 19, 2025. Iranian missiles reportedly caused serious damage at four locations in central and southern Israel, including Soroka Hospital in Beersheva. Meanwhile, Israeli forces are said to have attacked Iran's heavy water nuclear reactor in Arak.
Deni explained that this conflict could potentially destabilize the global economy through a surge in energy prices, financial market turmoil, and supply chain disruptions. As a nation with an open economic system, Indonesia's vulnerability hinges on the conflict's duration and scale.
"If the conflict is prolonged and triggers a sharp rise in global oil prices, the pressure on domestic inflation, energy subsidy costs, and fiscal deficits will increase," Deni told Tempo on Thursday, June 19, 2025.
According to him, the government has prepared several key mitigation strategies. First, through fiscal-monetary coordination between the Finance Ministry and Bank Indonesia to maintain macroeconomic stability and the rupiah's exchange rate.
This coordination will extend to supporting the financial sector with the Financial Services Authority (OJK) and the Deposit Insurance Corporation (LPS) under the Financial System Stability Committee (KSSK). Efforts are underway to strengthen foreign exchange reserves and stabilize the domestic currency.
Secondly, through the fiscal policy response. The government will prepare targeted fiscal stimulus and reallocate state expenditures to preserve purchasing power and stimulate productive sectors.
Additional mitigation efforts include energy diversification and bolstering food security. Despite these challenges, Deni remains optimistic about Indonesia's ability to navigate the situation. "Looking at previous crisis management experiences, including the pandemic and global trade tensions," he remarked.
During the monthly state budget press conference last Tuesday, Finance Minister Sri Mulyani underscored the significant impact of the Iran-Israel tensions. The state treasurer highlighted the twin risks of oil price uncertainty and global economic slowdown.
She noted that global oil prices remain volatile, even though they are currently below the 2025 state budget macro assumption of US$82 per barrel. Meanwhile, oil and gas lifting figures are still below the targeted macro assumption.
"These three variables: oil price, oil lifting, and gas lifting, are not only influenced by conditions in our country but are also affected by what is currently happening in the Middle East, namely the Israel-Iran war," Sri Mulyani concluded.
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