Budget Deficit Ceiling Above 3%, Purbaya Awaits Presidential Order

Jakarta — Finance Minister Purbaya Yudhi Sadewa has stated his readiness to expand the maximum budget deficit ceiling above 3% of gross domestic product (GDP) if directly ordered by President Prabowo Subianto.

The 3% GDP threshold currently represents the maximum deficit limit stipulated in the explanatory section of Article 12, paragraph 3 of Law No. 17 of 2003 on State Finance.

“I am simply the President’s hand. If ordered, we will implement it,” Purbaya said at his office in Jakarta on Friday, 13 March 2026.

Nevertheless, Purbaya acknowledged that such a decision must consider future investor sentiment, particularly its potential impact on international rating agencies’ assessments of Indonesia’s credit rating and debt.

“The consideration would be whether breaching that threshold would cause rating agencies to give a negative assessment,” Purbaya stated.

He argued that if global rating agencies that serve as benchmarks for investors acted fairly, a fiscal deficit expansion should not alter their assessment of Indonesia’s debt rating. After all, the government has consistently maintained its fiscal deficit below the State Finance Law threshold.

“Actually, if fairly assessed, our scaling is already slightly below 3%, barely even. In fact, we perform better — we spend close to 3% whilst our growth is faster than other countries,” Purbaya said.

He also emphasised that countries with economic capacity comparable to Indonesia, such as Vietnam and India, already maintain fiscal deficits exceeding the 3% level, which is also adopted by European countries under the Maastricht Agreement.

“Perhaps Vietnam’s is higher than ours, at around 4%. India’s is even higher, at 5-6% deficit. So given that European countries are all already higher, and then America, South Korea, Japan — based on these figures alone there should be no issue,” Purbaya stated.

Before deciding on deficit expansion, Purbaya emphasised that the government will conduct a deeper examination of how global rating agencies assess countries and what factors beyond deficit influence their evaluations.

“They look at things differently from how we see it, and that is what we are currently studying. But what is clear is that for now we will implement fiscal policy carefully,” Purbaya said firmly.