Finance Minister Purbaya Unaware of Budget Deficit Expansion Proposal
Finance Minister Purbaya Yudhi Sadewa has stated that he is unaware of any proposal to expand Indonesia’s budget deficit, known as the APBN (Anggaran Pendapatan dan Belanja Negara). The minister indicated that there has been no specific discussion regarding deficit expansion in recent limited cabinet meetings he has attended.
“I am not yet aware. It is still being considered. However, we continuously assess the impact of rising global oil prices on our budget. So when a decision is needed, our calculations will be complete,” Purbaya told reporters at the Ministry of Finance office in Jakarta on Friday, 13 March.
The proposal to expand the budget deficit has emerged amid concerns about fiscal pressure on Indonesia due to global geopolitical tensions. Indonesia’s current budget deficit ceiling is set at 3% of Gross Domestic Product, as mandated by the Law on State Finance.
Purbaya acknowledged considerations regarding international rating agencies’ assessments if the deficit were to exceed 3%. He noted that many neighbouring countries maintain deficit-to-GDP ratios higher than Indonesia’s current threshold.
“In fairness, most countries surrounding us are already slightly above 3%, there are hardly any below it. In fact, we perform better than them. When we approach 3%, our growth rate is faster than other countries,” said Purbaya.
He cited examples including Vietnam, which operates at over 4% deficit, India at 5-6%, and European and American countries, all of which have higher deficit thresholds.
“So based on those figures alone, there should be no problem with deficits above 3%. However, rating agencies focus on other factors that we are currently studying. But what is clear is that we will continue to implement fiscal policy prudently,” Purbaya stated.
Regarding any decision on the deficit, the Finance Minister said he will await presidential direction. “Whatever the president orders, we will implement. I am merely the president’s instrument,” he concluded.