Indonesia: Expansionary stance with narrowing buffer – Standard Chartered
Standard Chartered’s Aldian Taloputra assesses Indonesia’s 2027 fiscal plans, noting a targeted deficit of 2.4% of GDP versus 2.9% in 2026. The bank maintains its own forecast of a 2.9%-of-GDP deficit, citing ambitious revenue assumptions and potential tax shortfalls.
Standard Chartered’s Aldian Taloputra analyzes Indonesia’s fiscal plans for 2027, highlighting an anticipated deficit of 2.4% of GDP, down from the 2.9% projected in 2026. Despite a reduced buffer, the deficit remains below the 3% limit. The budget aims to strengthen key sectors like food, energy, education, and defence, as well as restructure SOE assets and attract private investment in priority areas.
While tax revenue growth is expected to accelerate to 12% in 2027, it is seen as ambitious due to potential risks such as lower commodity prices and uneven growth drivers. The bank forecasts a 2.9% fiscal deficit for 2027, acknowledging the possibility of tax revenue shortfalls due to weaker commodity prices and slower tax restitution. Financing needs are projected to be larger in 2027, primarily because of higher debt maturities.
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