Finance Minister Unaware of APBN Deficit Expansion Proposal, Awaits Presidential Direction
Finance Minister Purbaya Yudhi Sadewa acknowledged his lack of knowledge regarding discussions about expanding the State Budget Deficit (APBN) ceiling. The minister stated that no specific discussion about widening the deficit occurred in recent limited cabinet meetings (ratas) that he attended.
“I am not yet informed. It is still being considered perhaps. However, we consistently calculate the impact of rising global oil prices on our state budget. So when a decision is needed, our calculations will already be complete,” Purbaya told media representatives at the Ministry of Finance offices in Jakarta on Friday, 13 March.
The proposal to expand the APBN deficit limit has emerged amid concerns about fiscal pressures on Indonesia resulting from global geopolitical instability. Currently, the APBN deficit ceiling is set at 3% of Gross Domestic Product (GDP) as mandated by the State Finance Law.
Meanwhile, Purbaya did not dismiss considerations regarding international rating agencies’ assessments should the APBN deficit exceed 3%. He also observed that numerous countries operate with deficit-to-GDP ratios higher than Indonesia’s.
“In fairness, most neighbouring countries are barely below 3%, with almost none achieving this. In fact, our performance is better than theirs. When we are close to 3%, our economic growth is faster than other nations,” Purbaya explained.
He cited Vietnam operating above 4%, India at 5%-6%, and European and American countries maintaining higher deficit thresholds.
“So based on those figures alone, there should be no problem with a deficit above 3%. Only they (rating agencies) see other matters that differ from us, which we are currently studying. But clearly, at this time we will implement fiscal policy prudently,” Purbaya stated.
Regarding this deficit decision, the Finance Minister will await presidential guidance. “If ordered, we will implement it. I am merely the President’s instrument,” he concluded.