Antara News·Indonesia·Tuesday, September 29, 2026 at 05:59 PM

Indonesia designs prudent 2027 State Budget amid global risks

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Bayu Saputra, Yashinta Difa

Jakarta (ANTARA) - Indonesia’s 2027 State Budget has been designed with a prudent and credible approach to buffer the national economy against persistent global uncertainty, Finance Minister Suahasil Nazara told lawmakers on Tuesday (September 29).

Addressing the House of Representatives (DPR RI) during its 7th Plenary Session in Jakarta, Suahasil stated that the fiscal design aims to cushion the impact of supply chain disruptions, commodity price volatility and high global interest rates that threaten capital flows into emerging markets.

"On the other hand, in the financial sector, policy interest rate hikes by the Federal Reserve, as well as central banks in Europe and Japan, have the potential to affect global financial conditions and investor appetite for emerging markets like Indonesia," the minister said.

"However, we are grateful that amidst these difficult global challenges, Indonesia's economic fundamentals continue to demonstrate strong resilience,” he added.

Suahasil highlighted Indonesia's solid fiscal footing, pointing to a cumulative economic growth rate of 5.45 percent year-on-year in the first half of 2026, with second-quarter growth reaching 5.29 percent.

By August 2026, state revenue had reached Rp2,055.6 trillion (approximately US$114.84 billion), or 65.2 percent of the annual target.

Throughout 2026, the government leveraged fiscal policy flexibly to manage natural disasters, maintain energy and food supplies amid elevated oil prices and counter climate risks like El Niño, while capping the fiscal deficit below 3 percent of GDP.

"Fiscal policy must remain prudent but not passive. Fiscal policy must play an active role in maintaining growth momentum and protecting the public, all while upholding its credibility,” Suahasil asserted.

For 2027, the government and parliament agreed on an expansive fiscal stance with a target deficit of 2.4 percent of GDP.

Both parties approved an Rp9.07 trillion (US$506.70 million) increase in state spending, raising total expenditure to Rp4,106.26 trillion (US$229.40 billion) from the initial proposed figure of Rp4,097.19 trillion (US$228.89 billion).

The total expenditure includes central government spending of Rp3,371.26 trillion (US$188.34 billion) and regional transfers of Rp735 trillion (US$41.06 billion).

To match the spending expansion, agreed state revenue was revised upward by Rp9.07 trillion (US$506.70 million) to Rp3,435.10 trillion (US$191.91 billion), up from the initial target of Rp3,426.03 trillion (US$191.40 billion).

The updated revenue plan is largely anchored by tax collections, which were adjusted upward to Rp2,911.95 trillion (US$162.68 billion) from the previous figure of Rp2,907.95 trillion (US$162.46 billion).

Meanwhile, non-tax state revenue saw a corresponding increase to Rp522.48 trillion (US$29.19 billion), rising from its prior projection of Rp517.41 trillion (US$28.91 billion).

The macroeconomic assumptions approved for the 2027 budget include GDP growth of 6.0 percent, inflation at 2.5 percent and 10-year government securities yields at 6.9 percent.

The budget sets the exchange rate assumption at Rp17,500 per US dollar, the Indonesian Crude Price (ICP) at US$75 per barrel, crude oil lifting at 612,500 barrels per day and natural gas lifting at 954,000 barrels of oil equivalent per day.

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