Initial 2027 State Budget Draft Targets 6.5% Growth, Requires Rp8,743.45 Trillion
The Budget Committee (Panja) of the Indonesian House of Representatives (DPR) and the government have agreed on the basic macroeconomic assumptions for the 2027 State Budget (APBN), setting an economic growth target of 5.8% to 6.5%. This growth trajectory is supported by stable macroeconomic indicators, including an inflation rate of 1.5% to 3.5%, a rupiah exchange rate of Rp16,800 to Rp17,500 against the US dollar, and a 10-year government bond yield of 6.5% to 7.3%. The Indonesian Crude Price (ICP) is assumed to be in the range of US$70 to US$95 per barrel, with oil lifting of 605,000 to 620,000 barrels per day and gas lifting of 951,000 to 990,000 barrels of oil equivalent per day.
The committee’s agreement document states that the formulation of the 2027 economic growth assumptions considered geopolitical situations, global and domestic economic developments, and various potential opportunities and risks affecting national economic performance. It also took into account the effectiveness of the fiscal, monetary, and financial sector policy mix in maintaining stability while stimulating economic activity. The committee emphasised the importance of a more optimistic growth projection supported by structural economic transformation as a foundation for achieving the higher growth envisioned by President Prabowo Subianto.
To achieve the growth target of up to 6.5% in 2027, the committee agreed on several strategic measures, including maintaining household consumption growth in the range of 5.3% to 5.6%. The government is expected to refine social assistance and subsidy policies to be more targeted, encourage job creation, and control inflation, particularly for food, transport, education, and health. Improving the business climate is also a key strategy, through enhancing ease of doing business, reducing logistics costs, providing tax and customs facilities, and ensuring legal certainty.
These measures are expected to boost investment interest, with investment growth targeted at 6.5% to 7.5%. The total investment requirement to accelerate economic growth next year is set at Rp8,666.60 trillion to Rp8,743.45 trillion. This comprises government investment of Rp417.85 trillion to Rp499.74 trillion, state-owned enterprise (BUMN) investment of Rp309.71 trillion to Rp350.17 trillion, private investment of Rp918.39 trillion to Rp1,128.96 trillion, share issuances of Rp83.27 trillion to Rp84.37 trillion, corporate bond issuances of Rp185.67 trillion to Rp187.32 trillion, and public internal funds of Rp6,751.71 trillion to Rp6,492.89 trillion.
The committee noted that the government’s investment role is relatively limited, necessitating significant empowerment of private investment. The Danantara sovereign wealth fund is expected to play a major role in boosting quality investment in state-owned enterprises and contributing to private investment. The committee agreed to strengthen the role and contribution of the Danantara Investment Management Agency in national investment to create quality economic growth, accelerating investment in strategic sectors to enhance Indonesia’s competitiveness in the global supply chain and create higher-quality jobs.
The committee also encouraged strategies to revive national industrial capabilities based on domestic capacity and advantages. Two key strategies include expanding and deepening the downstreaming programme and building priority national industries that are not owned or controlled by other countries but remain part of the global industrial supply chain. These industrial policies are expected to be supported by various facilities, including taxation, customs, licensing, funding support, and human resources. The strategy is projected to improve the national export balance to a range of 7.1% to 8.8%.