Jakarta. Finance Minister Purbaya Yudhi Sadewa signaled on Tuesday that the government will continue its budget efficiency and spending refocusing measures in 2027 as fiscal pressures rise from a growing number of flagship programs, including free nutritious meals, energy subsidies, tuition-free schools, and the establishment of tens of thousands of rural cooperatives.

Speaking during a plenary session at the House of Representatives, Purbaya said the government would focus on improving the effectiveness of subsidies and social assistance programs to protect household purchasing power and support poverty-reduction efforts.

“The government remains committed to improving the quality of state spending through efficiency and refocusing measures so that budget allocations become more productive, better targeted, and capable of delivering tangible benefits for the economy and society,” Purbaya told lawmakers.

He added that the government would continue shifting toward more targeted and equitable social assistance and subsidy programs based on a centralized beneficiary database to reduce leakages and improve accountability.

For 2027, the government has set a budget deficit target of between 1.8% and 2.4% of gross domestic product. State revenue is projected at 11.82%-12.40% of GDP, while expenditure is expected to reach 13.62%-14.80% of GDP.

On the revenue side, Purbaya said the government would seek to optimize state income without undermining economic growth, investment, or environmental sustainability. Planned measures include broadening the tax base, strengthening taxpayer compliance, and increasing the use of technology and big-data analytics in tax administration.

Last month, President Prabowo Subianto outlined the fiscal framework for the preparation of the 2027 state budget before lawmakers.

The government’s baseline assumptions include economic growth of 5.8%-6.5%, inflation of 1.5%-3.5%, a 10-year government bond yield of 6.5%-7.3%, and an exchange rate of Rp 16,800-Rp 17,500 per US dollar.

The currency assumption is already under pressure, with the rupiah currently trading above Rp 18,000 per dollar.

The government also assumes Indonesian crude oil prices of $70-$95 per barrel, oil production of 602,000-615,000 barrels per day, and natural gas output of 934,000-977,000 barrels of oil equivalent per day.

The 2027 development targets include reducing the poverty rate to 6.0%-6.5%, lowering open unemployment to 4.30%-4.87%, maintaining a Gini ratio of 0.362-0.367, raising the human capital index to 0.575, improving the farmer welfare index to 0.8038, and increasing the share of formal employment creation to 40.81%.

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