Parliamentary Budget Committee: Government still has room for deficit below 3 per cent
Jakarta — The head of the parliamentary budget committee (Banggar DPR), Said Abdullah, believes the government still has fiscal space to maintain a deficit below 3 per cent of gross domestic product (GDP).
This statement responds to Finance Minister Purbaya Yudhi Sadewa’s recent indication that the 2026 state budget deficit could exceed 3 per cent of GDP.
“To achieve fiscal discipline, there are certainly many ways,” Said said in a statement in Jakarta on Friday.
He cited several approaches, including maintaining state revenue targets, improving the tax system through the core tax system (coretax) expected to enhance tax collection, and increasing export commodity prices such as crude oil and coal, which would boost non-tax state revenues (PNBP).
On the expenditure side, Said stated that the government could pursue efficiency by focusing on non-priority programmes, an area where the government has experience.
According to him, if spending can be controlled and balanced with revenue realisation, the target deficit below 3 per cent can be maintained.
Additionally, Said noted that the government must also maintain financing targets to ensure they are managed effectively. Amid the pressure of negative credit ratings, he continued, it is not easy to obtain financing through state securities (SBN).
“The finance minister and all officials must convince foreign buyers to continue accepting SBN and expand SBN in the retail segment,” he said.
Said stated that in the parliamentary budget committee, there has been no initial discussion presented by the government regarding widening the deficit beyond 3 per cent of GDP or quantitative easing policies.
If the government pursues a deficit policy exceeding 3 per cent of GDP, Said said there are advantages and disadvantages. The advantage in the short term is greater fiscal space, but in the medium term this will shift current fiscal burdens to the future since the deficit expansion is financed by debt.
He noted the same applies to quantitative easing policies. If using a model where Bank Indonesia absorbs SBN from the secondary market, the central bank’s capacity must be considered since the central bank has responsibility for controlling exchange rates and inflation.
These two responsibilities are not easy, Said stressed, requiring vigilance and strong coordination of Bank Indonesia’s policy instruments.
“It must be calculated carefully, so that when Bank Indonesia absorbs SBN in the secondary market, it does not collapse the exchange rate and inflation control that is its primary responsibility. The risks must be calculated very carefully,” Said said.
Likewise, he continued, with money printing, the risk of stagflation must be analysed clearly and cannot be done arbitrarily because currently consumer purchasing power is weak, so if more money circulates simultaneously, stagflation could occur.
The head of the parliamentary budget committee hopes there will be studies involving economists so that each economic policy receives adequate technocratic support, enabling all risks to be mapped including their mitigation.
“What I want to emphasise is that our fiscal position is healthy, stable, and sustainable,” he said.