Jakarta (VNA) – Indonesia is ready to adjust budget expenditure to keep its fiscal deficit below 3% of GDP - widely regarded as a critical safety threshold for national fiscal stability, as the conflict in the Middle East threatens to drive up oil prices and pile more pressure on the economy.
According to financial authorities, a key pillar of this strategy is strengthening fiscal transparency and discipline, particularly after earlier concerns that weighed on market confidence.
The government has stepped up disclosure of financial information and corporate ownership structures, tightened oversight of capital flows and public spending, and maintained regular dialogue with international investors. These measures are seen as essential to reinforcing fiscal credibility, a decisive factor for emerging economies like Indonesia.
Improving the efficiency of public spending is another core priority. The government have rolled out broad cost-cutting measures, especially across ministries and non-essential programmes. If necessary, the government is prepared to trim spending deemed to have limited impact on growth in order to safeguard budget balance.
Alongside expenditure control, Indonesia is also leveraging market factors to boost revenue. Adjustments to tax and resource export policies, coupled with gains from higher commodity prices—particularly in the energy sector—have helped expand the fiscal base. These efforts have partially offset rising spending needs amid fluctuations in global oil and energy prices.
The administration of President Prabowo Subianto is pursuing ambitious growth targets while striving to uphold fiscal discipline to sustain investor confidence. In 2025, Indonesia’s budget deficit stood at approximately 2.9% of GDP—close to the ceiling but still under control.
Adhering to the 3% cap is not only a legal requirement but also a key signal of macroeconomic stability.
With external pressures persisting, the ability to hold the deficit line at 3% will remain a crucial test of the government’s administration./.
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