Indonesia's Prabowo unveils 2027 budget plan with 2.4% deficit, 6% growth goal
Indonesia's President Prabowo proposes a 2027 budget with a 2.4% GDP deficit and a 6% growth target, focusing on self-sufficiency and industrial development.
Indonesian President Prabowo Subianto presented his 2027 budget proposal to parliament on Friday, outlining a spending plan of approximately $230 billion with a fiscal deficit set at 2.4% of GDP. The proposal aims to accelerate growth in Southeast Asia's largest economy to 6%.
The budget, which represents a 3.9% increase from this year's projected spending, will prioritize eight key programmes including food and energy self-sufficiency, domestic industrial development, and education. Revenues are projected to reach 3,426 trillion rupiah, up 6.8% from current estimates.
The proposed deficit is the smallest since 2024 and marks a reduction from the 2.85% projected for 2026, remaining within Indonesia's legal limit of 3% of GDP.
Prabowo's fiscal approach has drawn investor scrutiny since he took office in October 2024, particularly following an increase in fuel subsidy spending this year amid rising global crude prices. The rupiah's depreciation and capital outflows have further complicated his agenda, alongside concerns about central bank independence, equity market transparency, and commodity export centralisation.
The budget assumes GDP growth of 6% in 2027, inflation at 2.5%, an average exchange rate of 17,500 rupiah per dollar, and a 10-year bond yield of 6.9%. While the official growth target for this year is 5.4%, Prabowo expressed confidence that 6% growth is achievable in 2025. He has set an ambition to reach 8% growth by 2029.
Second-quarter growth this year stood at 5.3%, with July inflation at 2.88%, within the central bank's target range, supported by fuel subsidies.