Indonesia 2027 Budget Explained: Growth, Inflation, Rupiah and Deficit Targets
Addin Anugrah Siwi
August 15, 2026 | 10:26 am
President Prabowo Subianto has set a series of economic assumptions and fiscal targets that will form the basis of Indonesia’s proposed 2027 state budget, including
6% economic growth, 2.5% inflation and a budget deficit of 2.4% of gross domestic product.
The assumptions, unveiled in Prabowo’s Financial Note speech to parliament in Jakarta on Friday, set out the government’s economic outlook and spending priorities for next year.
“We do not choose between growth and prudence. We choose both. We do not choose between helping the people and maintaining the state budget. We do both,” Prabowo said in his speech to the House of Representatives.
Prabowo said the 2027 budget would be
“expansive, collaborative, targeted and measurable” as his administration seeks to push economic growth higher while maintaining fiscal discipline.
Here are the key assumptions and targets underpinning the 2027 budget proposal.
1. Economic growth: 6%
The government is targeting economic growth of
6% in 2027, up from the
5.4% growth assumption in the 2026 state budget.
The government expects fiscal policies to support stronger economic activity and productivity while accelerating the shift toward higher-value-added sectors.
The target would represent a significant acceleration from Indonesia’s recent growth performance. The economy grew
5.29% year-on-year in the second quarter of 2026, according to official data.
The government's target is also more ambitious than projections from major international institutions. For 2027, the
International Monetary Fund forecasts growth of 5.1%, while the
World Bank projects 5.2% and the
OECD estimates 5%.
2. Inflation: 2.5%
The government expects inflation to be maintained at around
2.5% in 2027, in line with this year’s target.
Indonesia’s annual consumer price inflation stood at
2.88% in July 2026, remaining comfortably within Bank Indonesia’s official inflation target of
2.5%, with a ±1 percentage-point tolerance corridor, or between 1.5% and 3.5%.
3. 10-year government bond yield: 6.9%
The government has assumed a
6.9% yield on 10-year Indonesian government securities (SBN) for 2027.
The assumption is slightly below the current market yield. Indonesia’s 10-year government bond yield stood at
7.062% on Aug. 14, suggesting the government expects borrowing costs to ease somewhat in 2027.
The yield spread over 10-year US Treasuries stood at
240.5 basis points, reflecting the additional return investors demand to hold Indonesian government debt.
4. Rupiah: Rp17,500 per US dollar
The government has based its 2027 budget on an exchange-rate assumption of
Rp17,500 per US dollar.
The rupiah stood at
Rp17,826 per US dollar at the close of Aug. 14, meaning the currency was about
1.9% weaker than the government’s 2027 budget assumption. Year to date, the rupiah has weakened by around
7%.
5. Oil price: $75 per barrel
The government has assumed an
Indonesia Crude Price (ICP) of $75 per barrel for 2027.
It has also established oil and gas production targets. Oil lifting is projected at
610,000 barrels per day, while gas lifting is targeted at
954,000 barrels of oil equivalent per day.
International crude oil prices have averaged roughly
$81-$87 per barrel year to date in 2026, depending on the benchmark.
Prices have been highly volatile this year amid conflict in the Middle East, including the war involving Iran, which triggered the closure of the Strait of Hormuz in the first half of the year, before prices gradually eased in the third quarter.
6. State spending: Rp4,097.2 trillion
The government plans to spend
Rp4,097.2 trillion ($230 billion) in 2027, up from
Rp3,842.7 trillion allocated under the 2026 budget.
State revenue is projected at
Rp3,426 trillion, compared with
Rp3,153.6 trillion in the 2026 budget.
The government therefore plans
Rp671.2 trillion in financing, resulting in a fiscal deficit equivalent to
2.4% of GDP.
That compares with planned financing of
Rp689.1 trillion and a deficit of
2.68% of GDP under the 2026 budget.
Prabowo said the government would seek to reduce the deficit further, noting that Indonesia ultimately aspires to achieve a
balanced budget.
7. Poverty: 6%-6.5%
The government is targeting a poverty rate of
6%-6.5% in 2027, compared with a target range of
6.5%-7.5% for 2026.
Prabowo said stronger economic growth and more effective use of the state budget would help reduce poverty.
The government plans to support the target through fiscal reforms, including improving state revenue collection, reducing revenue leakage and increasing spending efficiency.
According to the latest data from the Central Statistics Agency (BPS), Indonesia’s poverty rate stood at
8.07% in March 2026, down from
8.25% in September 2025, continuing a downward trend.
The government’s 2027 target would therefore require a significant further reduction in the poverty rate.
8. Unemployment: 4.30%-4.87%
The government aims to reduce the open unemployment rate to
4.30%-4.87% in 2027, from a target range of
4.44%-4.96% in 2026.
The government sees stronger economic growth, productivity improvements and economic transformation as key to creating more employment opportunities.
According to the latest BPS data, Indonesia’s open unemployment rate stood at
4.65% in May 2026, equivalent to
7.22 million people, down slightly from 4.68% in February.
The latest figure suggests that the government’s 2027 target range is broadly in line with current unemployment levels, although reaching the lower end would require further improvement in labor-market conditions.
9. Income inequality: Gini ratio of 0.362-0.367
The government is targeting an improvement in income inequality, measured by the Gini ratio, to between
0.362 and 0.367 in 2027.
That compares with a
2026 target range of 0.377-0.380. A lower Gini ratio indicates lower income inequality.
Prabowo also set a
Human Capital Index target of 0.575, with social protection and community empowerment programs expected to support the government’s broader welfare objectives.
10. Eight national priorities
Beyond its macroeconomic assumptions, the 2027 budget will focus on
eight National Priority Work Programs (PKPN):
- Food security
- Energy and water independence
- Education
- Health
- Downstream processing and industrialization
- Infrastructure, housing and disaster resilience
- Strengthening the people’s economy and rural development
- Poverty reduction
The government also plans to support these priorities through stronger
defense and security, law enforcement, public-sector governance, digitalization and economic diplomacy.
Taken together, the proposed 2027 budget reflects the Prabowo administration’s effort to accelerate Indonesia’s economic growth while keeping the fiscal deficit comfortably below the statutory 3% of GDP ceiling. The central challenge will be translating a substantial increase in government spending into faster growth, employment and poverty reduction without undermining fiscal stability.
finance.detik.com
