Govt relies on private sector as engine of growth in 2027
“Right now, this year alone, we are pushing (the economy) to approach 6 percent, so the opportunity is enormous. I hope that next year the private sector’s engines will be running better than they are now,” Purbaya said here on Wednesday, following the submission of the government’s Macroeconomic Framework and Fiscal Policy Principles (KEM-PPKF) for 2027.
Purbaya considers the growth target realistic, despite the rupiah exchange rate continuing to weaken to Rp17,700 per US dollar.
According to him, the government has prepared various measures to strengthen the rupiah, including intervention in the bond market.
“We have entered the bond market, but there are also government measures that will significantly strengthen the rupiah,” he claimed.
He stated that the exchange rate assumptions for next year have been carefully calculated.
“We have calculated the (macro) assumptions using a fairly robust econometric model. So, what is the engine? This (current economy) is driven by a private sector engine that is just starting to move, not yet fully operational. I think it will move faster next year,” Purbaya noted.
Regarding tax policy, the State Treasurer confirmed that the government has no plans to add new taxes next year.
However, he opened the door to gradually implementing new taxes if the public’s economic conditions are deemed healthier.
“Well, we will look at it selectively… we will not implement taxes that could disrupt public purchasing power and disrupt the direction of the economy,” he added.
For 2027, the government targets state revenue at 11.82 percent-12.40 percent of gross domestic product (GDP), while state expenditure is projected at 13.62 percent-14.80 percent of GDP. The fiscal deficit is targeted at 1.8 percent-2.4 percent of GDP.
Under the macroeconomic assumptions, the government projects economic growth at 5.8 percent-6.5 percent in 2027, above the 5.4 percent target set in the 2026 state budget.
Inflation is forecast at 1.5 percent-3.5 percent, while yields on 10-year government bonds are projected at 6.5 percent-7.3 percent.
The rupiah is expected to trade between Rp16,800 and Rp17,500 per US dollar, equivalent to about US$1 for every Rp16,800-Rp17,500, weaker than the 2026 assumption of Rp16,500.
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Translator: Bayu Saputra, Yashinta Difa