Indonesia parliamentary committee approves incoming government’s budget

INDONESIA’S key parliamentary budget committee on Tuesday (Sep 17) approved increased spending for the incoming government of president-elect Prabowo Subianto while maintaining the fiscal deficit at 2.53 per cent of gross domestic product (GDP), its chair said.

The approved spending of 3,621.31 trillion rupiah (S$305.7 billion) for 2025 is around 6 per cent higher than the 2024 spending estimate of 3,412.2 trillion rupiah.

The increased spending accommodates key programmes of the new government, including a free school meal policy, which will cost 71 trillion rupiah next year. Prabowo sees the spending as necessary to meet his target of lifting growth to 8 per cent.

Investors have raised concerns that Prabowo’s policy plans could see the deficit widen beyond the 2.53 per cent target.

The budget, proposed by the outgoing government and the Prabowo’s team, expects revenues to rise to 3,005.1 trillion rupiah, compared with the 2024‘s figure of 2,802.5 trillion rupiah, the committee’s chair Said Abdullah said.

With those estimates, the fiscal deficit for 2025 was projected at 2.53 per cent of GDP versus a 2.7 per cent estimate for this year.

SEE ALSO

Indonesia’s trade surplus beats forecast in August

“The 2025 budget was designed to support an effective government transition,” Said Abdullah said.

The budget assumes the economy will grow 5.2 per cent next year, just above 5.1 per cent in the current year’s outlook, while inflation is expected to be maintained at 2.5 per cent for 2025. The maiden budget of Prabowo, who has pledged to increase revenues, set a tax receipts target of 2,490.91 trillion rupiah in 2025, 12.3 per cent more than the 2,218.4 trillion rupiah expected to be raised through taxes this year. The budget committee’s decision is expected to be approved by a wider parliamentary vote at a later date.

Prabowo will start his five-year term on Oct 20.