Regarding State Finance Bill, Government Maintains 3 Per Cent Deficit Limit

Jakarta (ANTARA) - Deputy Finance Minister Juda Agung has emphasised that the government remains consistent in maintaining the 2026 state budget (APBN) deficit below three per cent to preserve fiscal credibility.

“We remain consistent at below 3 per cent,” said Juda at the DPR RI Building, Jakarta, on Thursday, responding to journalist inquiries regarding Commission XI of the DPR RI, which is currently pushing for changes to the deficit limit through the State Finance Bill.

Juda stated that the effort to keep the deficit below 3 per cent aims to maintain fiscal credibility.

“Yes, it is about maintaining fiscal credibility,” he said.

Previously, Commission XI of the DPR RI discussed the drafting of the State Finance Bill through a series of Public Hearing sessions (RDPU). On Thursday, Commission XI held an RDPU to gather input and perspectives from economists.

During the hearing, the Chairman of Commission XI, Mukhamad Misbakhun, questioned whether the 3 per cent deficit limit should be considered an absolute and sacred figure that cannot be adjusted to economic conditions.

He noted that the provisions for a 3 per cent deficit and a debt ratio of 60 per cent to Gross Domestic Product (GDP) are not norms directly stated in the articles of the law.

In this regard, Misbakhun referred to Article 12 of Law Number 17 of 2003 concerning State Finance, which regulates four aspects related to the state budget but does not specify a deficit limit or debt ratio.

The 3 per cent deficit figure and the 60 per cent debt-to-GDP ratio appear in the explanatory section of the law.

He argued that the government requires fiscal space when economic conditions necessitate intervention, including to encourage growth expansion and to capitalise on the demographic bonus so that Indonesia can escape the middle-income trap.

“We have the momentum to escape the middle-income trap, to move the people from middle income to high income, and that requires growth expansion. How can we achieve that growth expansion if we lock the maximum deficit at 3 per cent?” said Misbakhun.

He also assessed that a deficit is the result of an imbalance between state revenue and expenditure. According to him, discussions regarding the deficit should not only look at the consequences but also address the underlying causes.

On that occasion, Misbakhun cited the historical background of the 3 per cent deficit limit, which is linked to the Maastricht Agreement and the fiscal conditions of European nations after World War II. He noted that those countries utilised financing and expansion to rebuild their post-war economies.

Misbakhun then compared that situation to Indonesia’s demographic bonus momentum and China’s experience in achieving economic transformation through development planning.

Therefore, he believes that fiscal policy must consider national interests and the state’s ability to provide welfare to its citizens.