Denying Wider Deficit and Emergency Ordinance, Airlangga Affirms Government Will Drive Efficiency

Jakarta – The Coordinating Minister for Economic Affairs, Airlangga Hartarto, has affirmed that the government will not ease the 2026 state budget deficit ceiling, instead focusing on optimising and streamlining spending across ministries and agencies (K/L).

This approach is acknowledged as a response to various global uncertainties, including the potential impact of geopolitical conflicts on the national economy in the 2026 fiscal year.

Therefore, through a limited coordination meeting (rakortas) with the Finance Minister and several other relevant ministries, Airlangga has reaffirmed that the government is preparing measures to optimise and improve budget efficiency.

“The direction from our President is that we must maintain the deficit at 3 per cent, where the special coordination meeting held earlier was also to follow up on yesterday’s plenary session,” Airlangga said at the office of the Coordinating Ministry for Economic Affairs in Jakarta on Monday, 16 March 2026.

He explained that during today’s rakortas, several major ministries have been asked to calculate potential spending efficiency gains that could be achieved. Although the efficiency figure remains preliminary, as it awaits the final decision from President Prabowo.

“So the major K/L have already been asked to calculate how much can be made efficient. But the figures are not yet final, because the President will ultimately make the decision,” he said.

Additionally, Airlangga also denied reports that the government will widen the state budget deficit or issue an emergency ordinance to address fiscal pressure. He assured that the government remains committed to maintaining fiscal discipline by keeping the deficit below the maximum threshold of 3 per cent of gross domestic product (GDP).

“So to prevent the deficit from increasing, fiscal discipline is necessary. The ideal condition would even be a balanced budget,” Airlangga said.

Nevertheless, Airlangga acknowledged that the government is also preparing various fiscal scenarios to anticipate the possibility of global conflict lasting longer than expected.

For instance, should the conflict persist for five to ten months, or even until the end of the fiscal year. However, as the Middle East conflict has only been ongoing for approximately two weeks, the government is currently choosing to adopt a budget efficiency approach.

“As long as the conflict has not reached five months, we are still using the scenario of budget cuts whilst maintaining the maximum deficit at 3 per cent,” he said.