JAKARTA, May 20 – Indonesia’s President Prabowo Subianto announced a fiscal deficit target range of 1.8% to 2.4% of GDP for 2027, aiming for economic growth as high as 6.5%.
In a rare address to parliament, Prabowo stressed the importance of ensuring Indonesia’s natural resources benefit its 280 million people.
“The earth, water, and all resources must be enjoyed by all Indonesians,” he said.
The 2027 target is sharply lower than this year’s 2.9% deficit outlook, which includes impacts from the Middle East conflict.
Inflation target is set at 1.5% to 3.5%, with growth target between 5.8% and 6.5%.
Prabowo’s remarks come as Indonesia, a top producer of nickel, palm oil, tin, and coal, plans to establish a body to manage key commodities to boost state revenue. The plan has spooked markets, with Jakarta’s stock index falling 3.5% on Tuesday.
His address comes amid increased scrutiny of Indonesia’s $1.4 trillion economy. Moody’s and Fitch cut credit rating outlooks to negative, citing reduced policymaking credibility.
MSCI warned Indonesia could be downgraded to frontier status, triggering a market rout of over $120 billion.
The rupiah hit record lows despite central bank interventions.
The target for the rupiah exchange rate in 2027 is 16,800 to 17,500 per dollar.
