Antara News·Indonesia·Monday, August 31, 2026 at 10:52 AM

Indonesia to tighten spending as 2027 budget targets 2.4 pct deficit

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Imamatul, Azis Kurmala

..we continue to work on efficiency while maintaining priorities,

Jakarta (ANTARA) - Indonesia’s 2027 draft state budget will prioritize improving the quality of government spending, Deputy Finance Minister Suahasil Nazara said on Monday.

The government has set a fiscal deficit target of 2.4 percent of gross domestic product (GDP) in the 2027 Draft State Budget (RAPBN). Suahasil said keeping the deficit under control was part of efforts to maintain fiscal health while improving the quality of the state budget.

“This is a figure we have designed to improve the quality of the budget,” Suahasil said in a written statement issued in Jakarta on Monday.

State revenue in the 2027 draft budget is projected at Rp3,426 trillion (US$207.3 billion), up 6.8 percent from the 2026 budget outlook of Rp3,208.1 trillion. Tax revenue is targeted at Rp2,908 trillion, an increase of 10.5 percent from the 2026 budget outlook of Rp2,631.4 trillion.

“This is good tax revenue growth by Indonesian standards. With economic growth of 6 percent and inflation of 3 percent, nominal GDP growth would be around 9 percent, so tax revenue is expected to grow faster than that,” Suahasil said.

Meanwhile, state expenditure in the 2027 draft budget is planned at Rp4,097.2 trillion, up 3.9 percent from the 2026 budget outlook of Rp3,942.4 trillion.

The government will continue to promote spending efficiency while ensuring that public priorities and government operations remain adequately funded.

“This is where we continue to work on efficiency while maintaining priorities,” Suahasil said.

Areas of spending receiving particular attention include social protection, government operations, personnel spending, and transfers to regional governments.

Transfers to regional governments are targeted at Rp735 trillion, up 5.5 percent from the 2026 budget outlook of Rp696.9 trillion.

The policy will also take into account regional governments’ capacity to adjust their spending to support the effective implementation of development programs at the local level.

Suahasil said the government would continue to strengthen the quality and health of the state budget through efficient and measurable fiscal management while maintaining national priority programs.

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