Finance Minister Purbaya Rules Out Changing Deficit Cap in State Finance Law
Key Takeaways
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JAKARTA, Investortrust.id — Finance Minister Purbaya Yudhi Sadewa says he will not pursue changes to Indonesia’s State Finance Law that caps the fiscal deficit at 3% of gross domestic product and government debt at 60%. His stance responds to a proposal from the House of Representatives’ Commission XI, which has included revisions of the law in the 2026 National Legislative Program.
Speaking at a media briefing at the Ministry of Finance in Jakarta on Friday, Sept 19, 2025, Purbaya emphasized that the government remains committed to fiscal prudence. “No, we are not changing it. Do you think I want to break the 3% limit? Not at all,” he said.
Purbaya argued that Indonesia’s economic outlook has been improving under his strategies, including the government’s placement of Rp 200 trillion, equal to $12.4 billion, in five state-owned lenders to boost household consumption and tax revenues. He maintained that these measures would strengthen fiscal capacity without breaching the statutory limits.
“We should not need to amend the law to raise the deficit or the debt ratio above 3% and 60%,” he said.
Arbitrary Rules, Double Standards
Purbaya noted that breaching the limits would not automatically signal fiscal irresponsibility, since the 3% deficit ceiling and 60% debt-to-GDP threshold are arbitrary. “What investors really care about is whether a country can pay its debts or not,” he explained.
He stressed that Indonesia has always honored its debt obligations and never defaulted. “Our wealth is more than sufficient, so there is no need to fear these limits,” he said.
The minister compared Indonesia with European nations that have repeatedly breached the deficit and debt rules yet still enjoy higher credit ratings. “Why is it that Europe and the United States can break the rules, but Indonesia cannot?” he asked.
Purbaya recalled asking Japanese economist Takatoshi Ito, an architect of Abenomics, about the inconsistency. Ito’s response, he said, was that Indonesia lacks the “privilege” to defy such rules. “That’s outrageous. There is no theory behind it, it’s arbitrary. The rating agencies are not fair,” he said.
Despite stronger fiscal conditions than some peers, Indonesia’s sovereign rating remains stuck at BBB+, while many European countries with higher debt burdens hold single-A ratings. “Our situation is better, so why are we still at BBB+?” he asked.
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