Indonesia proposes US$230 billion budget for 2027, eyes resource price control

Indonesian President Prabowo Subianto has outlined an ambitious US$230 billion budget for 2027, signaling a proactive economic strategy focused on resource control and industrial growth. The proposed budget targets a fiscal deficit of 2.4% of GDP, with the government aiming to boost economic expansion to 6% next year by maximizing benefits from the nation's resource earnings.

The 2027 budget is designed to be expansive, concentrating on eight core programs. These include achieving self-sufficiency in food and energy, strengthening domestic industrial sectors, and enhancing education. A significant aspect of Prabowo's plan involves tighter control over the country's natural resources, including the proposed creation of a commodity exchange for strategic goods set to launch in January 2027. This initiative follows a plan to monitor commodity exports through a company, Danantara Sumber Daya Indonesia (DSI), which is expected to be fully operational by December.

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We want to develop an Indonesia reference price for Indonesia's main commodity exports

President Prabowo emphasized Indonesia's aspiration to become a price-setter in the global commodities market, not merely a producer. "Indonesia must not forever remain a country where commodities are extracted while their prices and profits are determined elsewhere," he stated. He indicated that Indonesia would prefer to retain minerals like nickel, tin, and coal domestically if international buyers do not agree with the prices set by the nation. This assertive stance aims to ensure that Indonesia captures greater value from its natural wealth.

Furthermore, an arm of Indonesia's sovereign wealth fund, Danantara, is being prepared to manage long-term development projects that may not be commercially viable in the short term but are crucial for the country's future. This includes investments in projects such as the giant sea wall project on Java island. The proposed budget represents a 3.9% increase in spending compared to the previous year, with revenues expected to rise by 6.8%. The deficit target is the smallest since 2024, adhering to Indonesia's legal limit of 3% of GDP.

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Indonesia must not forever remain a country where commodities are extracted while their prices and profits are determined elsewhere. We do not merely want to be a global producer of commodities; we must become a price-setter for global commodities.