Jakarta. Finance Minister Purbaya Yudhi Sadewa said Monday that Indonesia’s economy was still in the safe zone, hence there was still no need to breach the 3% deficit cap — at least for now.

The government recently revealed Indonesia’s deficit could top 3% of the gross domestic product (GDP), depending on the fluctuating oil prices and rupiah, unless Jakarta is willing to make seismic budget efficiencies and cut its growth target. The budget shortfall can even reach 4.06% of GDP in the worst-case scenario, where crude costs costs $115 a barrel and rupiah trades at Rp 17,500 a dollar. This also calls for a government regulation in lieu of law, also known as Perppu, which the country had done in the Covid-hit 2020. Asked by reporters about how close Indonesia is to crossing the 3% cap, Purbaya claimed that Indonesia’s economy was still doing okay.

“We still haven’t seen such indicators [that require us to roll out a Perppu deficit breach]. Our finances are still in the safe zone. But if oil prices remain high for a long time, we will recalculate our budget, but I doubt we will immediately issue the new rules,” Purbaya said.

Purbaya went on to say that President Prabowo Subianto would only be open to lifting the 3% limit “during the crises”.

“But no [changes] during normal times. … We are not in a crisis. Our economy is doing great, and there is still spending. ... By crisis, that is when Indonesia and the rest of the world have fallen to a recession and there is no way out.”

In a recent interview with Bloomberg News, President Prabowo Subianto admitted that he would not revise the cap “unless there’s a very big emergency like Covid.” 

As of the end of February, Indonesia's deficit stood at 0.53% of GDP. The full-year budget shortfall reached 2.92% in 2025.

The Israel-Iran war has fueled energy risks as its repercussions affect the Strait of Hormuz, which handles 20% of the global oil transits. The disruptions have caused oil prices to soar beyond $100 a barrel as the world braces for the conflict to drag on.

Add as a preferred source on Google +