Said Abdullah Assures Budget Deficit Remains Below 3 Per Cent Despite Geopolitical Tensions

The Head of the Parliamentary Budget Committee (Banggar) Said Abdullah has affirmed that Indonesia’s fiscal foundation remains in a healthy and stable condition amid global geopolitical shocks.

“Iran has been bombed by the United States and Israel, and there are extraordinary humanitarian atrocities occurring. Of course, the spillover effects ripple through to other nations, and we cannot avoid it,” he stated in a video message received by Kompas.com on Thursday, 12 March 2026.

Beyond the escalation of conflict in the Middle East, Indonesia is also facing domestic economic pressures and negative assessments from international institutions such as MSCI and Goldman Sachs.

Nevertheless, the state budget deficit (APBN) for 2026 is assured to remain below the safe limit of 3 per cent of gross domestic product (GDP).

“As Head of Banggar, we comply with the Budget Law and the State Finance Law. The limit is clear: 3 per cent of GDP. I have never entertained any wild notions of thinking beyond that,” he stressed.

“I can assure you that the government is confident it has substantial reserves for contingencies, as part of our mitigation strategy,” he added.

For context, Indonesia’s budget deficit reached Rp 135.7 trillion through the end of February, with the 2026 budget projected at a deficit of 2.68 per cent of GDP, or Rp 698.15 trillion.

In response to fluctuations in Indonesian crude oil prices (ICP) that spiked due to Middle Eastern conflict, Said urged the public and policymakers not to panic.

Said stated that Banggar has conducted various simulations and tests to examine macroeconomic assumptions and the budget structure from January through 9 March 2026, with average ICP from January through 9 March remaining in the range of USD 68.8 per barrel.

Furthermore, Said noted that Banggar has formulated four recommendations to the government for controlling the budget deficit.

These recommendations include sharpening priority programmes, subsidies efficiency, elimination of upper-income compensation, and social support for micro, small and medium enterprises (MSME).

By implementing this strategy, Said stated, the government is expected to accumulate reserves or “substantial reserves” of approximately Rp 200 trillion.

These funds are considered sufficient to serve as a risk buffer without exceeding the constitutional deficit limit.