Indonesia Targets Up to 6.5% Growth and 2.4% Budget Deficit in 2027
Indonesia Targets Up to 6.5% Growth and 2.4% Budget Deficit in 2027
Jakarta. Indonesian lawmakers and the government have agreed to target a 2027 state budget deficit of 1.8%-2.4% of gross domestic product (GDP) and economic growth of 5.8%-6.5%, officials said on Thursday.
The agreement was reached during a working meeting of the House of Representatives’ Commission XI, which oversees financial affairs and banking, with the Finance Ministry, the National Development Planning Ministry, Bank Indonesia, and the Financial Services Authority at the parliamentary complex in Jakarta.
Finance Minister Purbaya Yudhi Sadewa said the government would continue to maintain fiscal discipline by keeping both the budget deficit and public debt at prudent levels to support sustainable economic growth.
“The government remains committed to fiscal discipline by keeping the deficit and debt within safe limits, namely a deficit below 3% of GDP and debt below 60% of GDP,” Purbaya said.
According to the minister, financing for the budget deficit will be managed in an innovative, prudent, and sustainable manner to support economic expansion and improve public welfare.
Purbaya also thanked lawmakers for their input during deliberations on the 2027 fiscal framework.
“All of these views will receive serious attention and be followed up through policy improvements,” he said.
The growth target is part of the government’s roadmap toward achieving annual economic growth of 8% by 2029.
To reach that goal, the government plans to improve the effectiveness of priority programs, strengthen coordination among fiscal, monetary, and financial-sector policies, and leverage support from Danantara Indonesia, Purbaya said. The government will also seek to improve the investment climate through deregulation and the removal of business obstacles.
Under the agreed macroeconomic assumptions, inflation is projected at 1.5%-3.5%, the yield on 10-year government bonds at 6.5%-7.3%, and the rupiah exchange rate at Rp 16,800-Rp 17,500 per US dollar.
On the revenue side, lawmakers and the government agreed on a 2027 state revenue target equivalent to 12.01%-12.40% of GDP, higher than the government’s initial proposal of 11.82%.
The target will be pursued through stronger tax compliance, expansion of the tax base via the Coretax system, adjustments to taxation policies for the digital economy and global standards, optimization of natural-resource revenues, and improvements in tax administration and enforcement.
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