Avoiding the Dilemma of Fiscal Efficiency

True efficiency means managing state resources in a smarter, more effective, and future-oriented manner.

Jakarta — Indonesia is currently facing a complex fiscal challenge. On one hand, the government is committed to maintaining budgetary discipline by adhering to a maximum deficit limit of three per cent of gross domestic product (GDP). On the other hand, the country is also required to accelerate economic growth to eight per cent whilst simultaneously financing various strategic national programmes that directly impact people’s lives.

Programmes such as free nutritious meals, free health check-ups, and various infrastructure development projects require substantial fiscal support.

This situation becomes increasingly complicated when the world faces heightened geopolitical uncertainty, particularly the conflict in the Middle East which could push global energy prices higher and disrupt international trade stability.

Under such circumstances, the government’s plans for fiscal efficiency through budget cuts across ministries and agencies can indeed be a necessary budgetary discipline option.

However, if implemented excessively, this policy also risks reducing fiscal stimulus to the economy. This is often analogised as the “fruit of simalakama” in fiscal management: a policy choice that carries significant consequences from both the perspective of programme fulfilment and the strategy that must be implemented.

Budget reality