Prabowo proposes US$230 billion budget for 2027; targets deficit at 2.4% of GDP
President Prabowo Subianto also announced that the government was planning to revise its citizenship law to allow some Indonesians to hold dual nationality for the first time.
Indonesian President Prabowo Subianto delivers his annual State of the Nation address, ahead of the country’s Independence Day celebrations in Jakarta on Aug 14, 2026. (Photo: AFP/Bay Ismoyo)
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JAKARTA: Indonesian President Prabowo Subianto on Friday (Aug 14) proposed to parliament a US$230 billion budget for 2027 with a fiscal deficit at 2.4 per cent of the country’s gross domestic product (GDP), amid plans to maximise benefits from resource earnings to boost growth to 6 per cent next year.
In his annual budget speech to parliament, Prabowo said the 2027 budget will remain expansive and will be focused on eight key programmes, which include achieving food and energy self-sufficiency, building domestic industrial sectors and education.
Prabowo, who pledged tighter control over the country’s natural resources, also proposed a plan to create a commodity exchange for Indonesia’s strategic commodities, aiming to launch operations on Jan 1, 2027.
It would follow a plan to monitor commodity exports through a company, Danantara Sumber Daya Indonesia (DSI), which he had earlier announced will be fully operational in December.
“We want to develop an Indonesia reference price for Indonesia’s main commodity exports,” he said.
Prabowo added that Indonesia would prefer to keep minerals like nickel, tin, and coal in the ground if buyers do not agree with the price Indonesia sets.
“Indonesia must not forever remain a country where commodities are extracted while their prices and profits are determined elsewhere. We do not merely want to be a global producer of commodities; we must become a price-setter for global commodities.”
The president also said that an arm of Indonesia’s sovereign wealth fund Danantara is being prepared to handle long-term development projects that are not commercially viable in the short term but are important for the country.
The arm will be called the Danantara Development Management Fund and will invest in projects including Java island’s giant sea wall project.
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INCREASED SPENDING
Prabowo proposed to spend 4,097.2 trillion rupiah (US$229.73 billion) in 2027, up 3.9 per cent from the projected spending level for this year.
Revenues are expected to reach 3,426 trillion rupiah next year, up 6.8 per cent from this year’s estimate. The proposed budget deficit is the smallest gap since 2024 and down from the 2.85 per cent of GDP deficit projected for 2026.
Indonesia’s law limits the government’s annual budget deficit to 3 per cent of GDP.
The figures are based on assumptions that GDP would grow 6 per cent in 2027, with the inflation rate expected at 2.5 per cent, the rupiah exchange rate averaging at 17,500 per dollar and the 10-year bond yield averaging at 6.9 per cent.
This year, the government’s official GDP growth target is 5.4 per cent, but Prabowo said in an earlier speech on Friday that he believes 6 per cent growth can be reached this year.
Prabowo has set a target to bring economic growth up to 8 per cent by the end of his presidential term in 2029. Growth was 5.3 per cent in the second quarter of this year.
Inflation in July stood at 2.88 per cent, comfortably within the central bank’s target range, thanks to the government’s fuel subsidies.
Prabowo’s economic agenda and fiscal policies have been under scrutiny from investors since he took office in October 2024, especially after an increase in the government’s fuel subsidy budget this year following a spike in global crude prices.
This in turn had raised questions about how his costly flagship programmes can be funded.
Prabowo’s fiscal agenda has also been complicated by the depreciation of the rupiah and large outflows of capital triggered by concerns about Indonesia’s fiscal health, the independence of its central bank, transparency issues in the equity market and his controversial policy to centralise commodity exports.
INDONESIA TO INTRODUCE ‘LIMITED’ DUAL CITIZENSHIP
In his second speech on Friday, Prabowo also announced that the government was planning to revise its citizenship law to allow some Indonesians to hold dual nationality for the first time.
Prabowo said the government would table the revision to parliament to allow “millions” from the Indonesian diaspora to contribute to the country’s development.
The dual citizenship plans would be “limited”, he said, adding the policy would be measured in its design, with “national interests” fully protected.
Indonesian law does not currently recognise dual citizenship for adults, and minors with two passports must choose their nationality when they turn 18.
“Today, I tell the parliament the government’s recommendation that we permit dual citizenship for selected talents that Indonesia needs,” he said, citing doctors, AI experts, artists and soccer players as examples.
“We shouldn’t force the best Indonesian talents to choose between a chance to contribute to the world and their ties to our land.”
Sufmi Dasco Ahmad, Indonesia’s deputy house speaker, told reporters that lawmakers had processed citizenship applications for athletes.
An influx of mainly Dutch-born members of Indonesia’s diaspora has entered the national soccer team.
Last year, Indonesia opened applications for permits that would allow former Indonesian citizens to live and work in the country for an indefinite period as an alternative to dual citizenship.
Calls to allow dual citizenship have increased amid concerns about a “brain drain” as Indonesians leave the country for better opportunities abroad.
Nearly 4,000 Indonesians became Singaporean citizens from 2019 to 2022, according to data from the Directorate General of Immigration. Indonesia’s population is 290 million people, making it the fourth most populous country in the world.
Source: Agencies/ia(as)
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