Indonesia open to breaching deficit cap only in crisis

2026-03-15 - 08:54

Indonesian president Prabowo Subianto expressed confidence that his administration can avoid raising fuel prices. (Reuters pic) JAKARTA: Indonesia would only approve a short-term increase in the deficit beyond 3% of gross domestic product if oil prices stay elevated for a sustained period due to the US-Israel war in Iran, president Prabowo Subianto said in an interview with Bloomberg News published today. Here are some key points from the interview: Prabowo said he has no plan to revise Indonesia’s legally mandated deficit cap of 3% of GDP “unless there’s a very big emergency like Covid. The president expressed confidence in his administration’s ability to avoid raising fuel prices, but cautioned that it would be “very difficult” if oil exceeds US$120 per barrel for a protracted period. Prabowo said his administration seeks to eliminate costly fuel subsidies over the next three years and replace them with 100GW of solar power. “We cannot survive on subsidies in the long run,” Prabowo said. Prabowo said he wouldn’t touch his signature free meals programme, which accounts for 11% of the central government’s budget this year, calling it “a stimulus for growth”. Last week, Indonesia’s senior economic minister said the country may impose additional taxes on certain ​commodities, such as palm oil, if the government needs to contain the oil spike’s impact ‌on the budget.