Macroeconomic Determinants of Energy Subsidy Allocation in ASEAN-5 Countries: An ARDL Panel Approach

Abstract

A solid fiscal framework is essential for stabilizing the economies of developing countries, particularly in facing macroeconomic shocks and global uncertainties. This study analyzes fiscal resilience vulnerabilities in the ASEAN-5 countries, namely Indonesia, Malaysia, the Philippines, Thailand, and Vietnam, during the period 2010–2025. The research focuses on the ratio of energy subsidies to GDP as a key fiscal instrument that functions as a shock absorber during periods of economic disruption. Employing a quantitative approach, this study applies the Autoregressive Distributed Lag (ARDL) model estimated through the Pooled Mean Group (PMG) estimator to examine the dynamic relationships among macroeconomic variables. The analysis utilizes official secondary data obtained from international institutions, including the International Monetary Fund (IMF) and the World Bank. The findings confirm the existence of long-term cointegration among the examined variables. The Error Correction Term (ECT) value of -0.4303 indicates that fiscal adjustment occurs at a rate of approximately 43.03% annually, requiring around 2.3 years for fiscal normalization following economic shocks. The results reveal that global oil prices have a positive and significant influence on energy subsidies in both the short and long term. Exchange rate depreciation does not significantly affect short-term subsidy fluctuations but creates significant negative pressure on long-term fiscal equilibrium. Meanwhile, domestic inflation does not show a significant effect on subsidy allocations. These findings highlight the importance of fiscal discipline, subsidy rationalization, and institutional coordination between fiscal and monetary authorities to strengthen fiscal resilience and maintain macroeconomic stability in ASEAN-5 economies.