Indonesia Sets 2027 Budget Goals: 6% Growth Amid Global Uncertainty

Indonesia's government is setting ambitious targets for its 2027 state budget, themed "Higher Growth, Faster Prosperity," despite anticipating complex global economic conditions and high uncertainty. Finance Minister Purbaya Yudhi Sadewa emphasized the government's readiness to manage these challenges, drawing on recent experiences to sustain the economy.

The macroeconomic assumptions for the 2027 budget project a robust 6 percent economic growth, with inflation targeted at 2.5 percent. The rupiah is expected to trade at 17,500 per US dollar, and the 10-year government bond interest rate is set around 6.9 percent. The budget also factors in an Indonesian Crude Price (ICP) of US$75 per barrel, with oil lifting targets of 610,000 barrels per day and gas lifting of 954,000 barrels of oil equivalent per day.

State revenue is projected to reach Rp 3,426.0 trillion, a 6.8 percent increase from the previous year, comprising Rp 2,908.0 trillion from taxes and Rp 517.4 trillion from non-tax sources. Total state expenditure is targeted at Rp 4,097.2 trillion, a 3.9 percent rise. The budget deficit is forecast at Rp 671.2 trillion, or 2.40 percent of GDP, a slight decrease from the previous year's target.

Beyond economic growth, the budget aims to improve social welfare indicators. By 2027, the poverty rate is targeted to fall between 6.0–6.5 percent, the Gini ratio between 0.362–0.367, and the open unemployment rate between 4.30–4.87 percent. The government also aims to boost the Human Capital Index to 0.575, enhance farmer welfare, increase formal employment, and raise per capita income to US$5,800–5,840, alongside improving environmental quality.

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The government can issue a fairly good policy response to mitigate the impact of global uncertainty on the Indonesian economy.