Prabowo's Speech Seen to Reinforce Fiscal and National Economic Policy Direction

GREAT Institute applauds President Prabowo Subianto’s speech in the plenary session of the Indonesian DPR on Wednesday, 20 May, which for the first time was delivered directly by the president regarding the preface to the Kerangka Ekonomi Makro dan Pokok-Pokok Kebijakan Fiskal (KEM-PPKF) for RAPBN 2027. Executive Director Sudarto said the move marks a new milestone in Indonesia’s constitutional tradition, because previously the foreword to the KEM-PPKF was typically delivered by the Minister of Finance. He argued that the president’s direct presence in the DPR signals the government intends to position the APBN 2027 as a strategic instrument to strengthen fiscal foundations and realign the direction of the national economic system amid geopolitical and geo-economic uncertainty. ‘The president did not present the APBN merely as a budget document, but as a tool for the country’s struggle,’ Sudarto said in a statement on Wednesday (20/5). In his address, the president targeted 2027 economic growth at about 5.8–6.5%, government revenue at 11.82–12.40% of GDP, government expenditure at 13.62–14.80% of GDP, and the budget deficit kept within 1.80–2.40% of GDP. The GREAT Institute judged the speech to carry more weight than a simple annual macro target announcement. Sudarto stated that the president explicitly linked the APBN with protecting the people, reforming the revenue structure, and strengthening sovereignty over national wealth. He also highlighted the low ratio of government revenue to GDP and alleged leakages in the management of national wealth, including practices of under-invoicing and transfer pricing. ‘He also diagnosed that Indonesia’s fiscal space is too narrow for a country of Indonesia’s size, and that this weakness cannot be separated from leakage, under-invoicing, transfer pricing, and weak state control of the value chain of strategic commodities,’ Sudarto said. Furthermore, the president stressed the importance of returning to the mandate of Article 33 of the 1945 Constitution by ensuring management of land, water, and natural resources is conducted to the greatest extent for the people’s prosperity. The Institute noted that this emphasis shows the government is beginning to merge the macro-fiscal agenda with structural corrections to the national economy in a more open manner. While acknowledging progress, Sudarto cautioned that the main challenge remains in implementation. He argued that a revenue target of 11.82–12.40% of GDP indicates revenue reform needs strengthening, and urged better oversight of commodity exports, cross-agency data integration, and governance of taxation and customs to raise the state’s fiscal capacity. The Institute also welcomed the signaling that the 2027 APBN deficit target of 1.80–2.40% of GDP reflects a balancing of pro-people development with fiscal discipline, and that a more centralised model of managing strategic commodities could strengthen state revenue and oversight of natural resources. ‘This speech is important because the President does not merely discuss targets, but also root causes. The challenge now is to ensure that the courage to diagnose the problems is followed by the courage to implement reforms,’ Sudarto concluded. Market participants are expected to monitor how strongly the government can signal fiscal stability and debt management.