Indonesian Finance Minister Sri Mulyani Indrawati on Budget Plans
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Indonesia plans deregulation to weather global economic hurdles
Indonesia plans deregulation to weather global economic hurdles. Finance Minister Sri Mulyani Indrawati has pledged to pursue deregulation in the fiscal sector. She noted that this approach aligns with the economic directives issued by President Prabowo Subianto to his aides in the Red and White Cabinet.Indrawati emphasized that the president had urged his ministers to streamline regulations and shorten bureaucratic processes for businesses.
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Jakarta (ANTARA) – Finance Minister Sri Mulyani Indrawati has pledged to pursue deregulation, or the simplification of existing rules, in the fiscal sector to shield Indonesia from “global economic turbulence.”In her Instagram post, cited on Thursday, she noted that this approach aligns with the economic directives issued by President Prabowo Subianto to his aides in the Red and White Cabinet.Indrawati emphasized that the president had urged his ministers to streamline regulations and shorten bureaucratic processes for businesses.The minister explained that such simplification is essential to help businesses weather economic uncertainties currently affecting the international community.The minister further noted that the government remains committed to prudently managing and utilizing the state budget in light of these challenges.Additionally, she emphasized that the Ministry of Finance would do its utmost to protect Indonesians from the impact of global economic issues, including by strengthening fiscal and monetary macroeconomic policies.During an economic forum attended by President Prabowo in Jakarta on Tuesday (April 8), the state treasurer outlined four deregulation measures aimed at assisting domestic businesses cope with the 32 percent tariff imposed by the United States on Indonesian products.Indrawati elaborated that under the first initiative, the Indonesian government plans to reform administrative processes related to taxation and customs.As the second measure, Indrawati revealed the government’s intention to reduce the tax rate on import earnings from 2.5 percent to 0.5 percent.Additionally, the government will lower import tariffs on US products from the range of 5-10 percent to between 0 percent and 5 percent.Regarding the fourth measure, the minister promised to adjust tariffs on crude palm oil exports.She expressed optimism that these measures, once fully implemented, would alleviate the impact of US tariffs on Indonesian business players, reducing their burden to 18 percent.
Translator: Imamatul S, Tegar Nurfitra
Editor: Azis Kurmala
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Indonesia expects 2026 GDP growth of between 5.2%-5.8%
The forecasts were revealed as the government outlined the basis of its 2026 budget. It will be the first budget prepared under President Prabowo Subianto, who took office in October. In 2025, the GDP growth target was set at 5.2 per cent.
The forecasts, along with predictions on bond yields and the rupiah exchange rate, were revealed as the government outlined the basis of its 2026 budget. It will be the first budget prepared under President Prabowo Subianto, who took office in October.
The finance ministry has said the 2026 fiscal plan will support Prabowo’s priority programmes, including the flagship free meals programme for an estimated 83 million students and pregnant women.
In 2025, the GDP growth target was set at 5.2 per cent. Prabowo has pledged to lift growth to 8 per cent by the end of his term in 2029. The projected budget deficit of between 2.48 per cent and 2.53 per cent of GDP for 2026 compares with a planned deficit of 2.53 per cent of GDP this year and 2024’s deficit was 2.29 per cent of GDP. REUTERS
Indonesia says economic growth could pick up next year, promises prudent budget
Indonesia’s government sees economic growth reaching at least 5.2% next year. The government continues to focus on improving food production, energy security and people’s wellbeing. Some analysts were sceptical about the target growth range, saying the focus on welfare was unlikely to boost the economy. Indonesia usually formalises its spending plans by the end of the third quarter, with the budget expected to be announced in May. The 2026 budget will be the first by President Prabowo Subianto, who wants to lift growth to 8% by 2029, since he took office in October. The deficit would be between 2.48% and 2.53% of GDP, compared with this year’s target of 2. 53%.
Summary 2026 GDP growth seen at 5.2% to 5.8%, versus 5.2% in 2025
‘Prudent budget’ with deficit at 2.48% to 2.53% of GDP in 2026
Higher spending expected on people’s welfare
JAKARTA, May 20 (Reuters) – Indonesia’s government sees economic growth reaching at least 5.2% next year as it continues to focus on improving food production, energy security and people’s wellbeing, its finance minister told parliament on Tuesday.
Finance Minister Sri Mulyani Indrawati said economic growth in 2026 would be between 5.2% and 5.8% next year with the bottom end of the range the same as 2025’s growth target.
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“We will reach the target in 2026 by maintaining people’s purchasing power… development of natural resources downstream industry and improving the investment climate, as well as human resources,” Sri Mulyani said as she outlined the basis of the government’s 2026 budget.
Still, some analysts were sceptical about the target growth range, saying the focus on welfare was unlikely to boost the economy.
“Still the same old story,” Jahen Rezki, an analyst from the University of Indonesia, told Reuters. “Minimal or no economic policies we see so far that support development … We need a lot of investment/financial deepening to be able to grow higher.”
Spending for health and education in 2026 could be increased by as much as 4% and 5% year-on-year, respectively, Sri Mulyani said, as the government pushes ahead with President Prabowo Subianto’s flagship programme of free meals for 83 million students and pregnant women, as well as to build hundreds of schools for poorer communities.
The 2026 budget will also focus on improving the defence sector by modernising military hardware and increasing the size of the reserve forces, Sri Mulyani told parliament.
Reiterating the government was committed to prudent spending, Sri Mulyani said the deficit would be between 2.48% and 2.53% of GDP, compared with this year’s target of 2.53%.
Jakarta also assumed a weaker rupiah next year – up to 16,900 a dollar – as a consequence of the ongoing global market uncertainties from U.S. tariffs.
The budget will be the first by Prabowo, who wants to lift growth to 8% by 2029, since he took office in October. Indonesia usually formalises its spending plans by the end of the third quarter.
Reporting by Stefanno Sulaiman, additional reporting by Ananda Teresia; Editing by John Mair and Kate Mayberry
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Gov’t Unlocks $5.2B in Budget Funds to Accelerate Spending
The Finance Ministry has released Rp 86.6 trillion ($5.22 billion) in previously frozen ministry and agency budgets. The unblocking follows a nationwide budget efficiency measure mandated by President Prabowo Subianto. The cuts drew criticism and sparked nationwide protests, particularly from students concerned about funding for education and social programs. Of the total, Rp 33.1 trillion was released to 23 newly formed ministries and institutions, while Rp 53.5 trillion went to 76 existing agencies. The newly available funds will support civil servant salaries, operational costs, and restructured flagship initiatives under the president’s development agenda.
The unblocking follows a nationwide budget efficiency measure mandated by President Prabowo Subianto, which had led to a temporary freeze of Rp 256.1 trillion in budget allocations earlier this year. The cuts drew criticism and sparked nationwide protests, particularly from students concerned about funding for education and social programs.
“As of April 25, we have focused and reallocated budget plans and lifted spending blocks in line with the president’s directive. Ministries and agencies can now resume spending on priority programs,” Deputy Finance Minister Suahasil Nazara said at a Wednesday briefing.
Read More: Sri Mulyani Reassures Investors on Prudent Budget Management as Stock Market Slumps
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The newly available funds will support civil servant salaries, operational costs, and restructured flagship initiatives under President Prabowo Subianto’s development agenda. Of the total, Rp 33.1 trillion was released to 23 newly formed ministries and institutions, while Rp 53.5 trillion went to 76 existing agencies.
The unblocking has already driven a sharp acceleration in state spending. Ministry expenditures surged from Rp 24.4 trillion in January and Rp 83.6 trillion in February to Rp 196.1 trillion in March, marking a 372.4 percent jump over the previous month. Major disbursements included funding for road maintenance, education aid, and the rollout of the Free Nutritious Meals program.
State Budget Deficit Reached Rp 104 Trillion
Finance Minister Sri Mulyani Indrawati said the state budget deficit reached Rp 104.2 trillion by the end of March, equivalent to 16.9 percent of the full-year ceiling of Rp 616.2 trillion.
“Even though we are running a deficit, it remains within planned levels. The APBN (state budget) was deliberately designed to be countercyclical, to support economic recovery and accelerate President Prabowo’s development agenda,” Sri Mulyani said.
State revenue through March totaled Rp 516.1 trillion, or 17.2 percent of the 2025 target, comprising Rp 400.1 trillion in tax revenue and Rp 115.9 trillion in non-tax income. Government spending reached Rp 620.3 trillion, or 17.1 percent of the target, with Rp 413.2 trillion allocated to central ministries and Rp 207.1 trillion transferred to local governments.
Sri Mulyani said the fiscal outlook remains stable, with key indicators tracking in parallel. “Revenue, spending, and deficit are all moving in tandem at around 17 percent of their respective targets. That’s a healthy sign,” she said.
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Indonesia to send finance, economy ministers to US trade talks
Indonesia will send a team of officials to Washington for trade talks. The country is among the hardest hit by the new US tariffs. It is also considering relaxing rules on local content in its products. The move is in response to the US plans to impose a 32 per cent tariff on Indonesian goods, which is a major source of revenue for the country. The U.S. is also planning to increase its own tariffs on Indonesian products.
Indrawati will join a delegation led by Coordinating Economic Minister Airlangga Hartarto to convey Indonesia’s stance to US officials, according to a presidential palace statement late on Monday (Apr 7). The team will also include Foreign Minister Sugiono.
South-east Asia’s largest economy has ruled out retaliating against US plans to impose a 32 per cent tariff on Indonesian goods, instead seeking to negotiate better terms. That includes pledges to ease non-tariff barriers such as local content requirements – the policy that led to an iPhone 16 sales ban last year.
Indonesia is also preparing to boost imports of US goods such as wheat, cotton and oil and gas, Hartarto said separately on Monday.
Hartarto, who has held a series of coordination meetings with ministers and business associations to outline a response to the escalating trade war, added that Jakarta is considering relaxing rules on local content for products in the information and communications technology sector.
Indonesia, which has long had a trade surplus with the US, one of its largest trading partners, exports palm oil, electric appliances, footwear, apparel and other goods to the world’s largest economy.
Indrawati – a former World Bank managing director who’s held her post as Indonesia’s finance chief under three consecutive administrations – is known as a steady hand in government, having led tax and budget reforms that helped Indonesia earn multiple credit rating upgrades by global ratings companies during her tenure.
Malaysian Prime Minister Anwar Ibrahim on Tuesday (Apr 8) said his country would also dispatch officials to Washington for talks.
He said over the weekend that Malaysia, the current chair of the Asean bloc of countries that were among the hardest hit by the new levies, would lead efforts to coordinate a regional response to US tariffs. BLOOMBERG