As the incoming government prepares to take office, the business community is calling on President-elect Prabowo Subianto to maintain fiscal discipline, even if it means expanding the state budget deficit. Experts have warned that widening the deficit could lead to a loss of investor confidence and higher borrowing costs, which could hinder economic growth.
Indonesian Employer Association (Apindo) chairwoman Shinta Kamdani emphasized the importance of discipline in managing any increase in the deficit. “Discipline is key, yes, even if the deficit is to be widened,” she said during an event in Jakarta on April 10. Apindo has prepared documents for each minister in the upcoming administration, highlighting continuity and ensuring that there will be clear guidelines for any expansion of spending.
The Indonesian Chamber of Commerce and Industry (Kadin) chairman Arsjad Rasjid also stressed the importance of discipline in managing any increase in government spending. One of Prabowo’s campaign promises was a planned free school lunch program that would cost Rp 400 trillion ($30 billion) per year, equivalent to 12 percent of this year’s state budget spending and around 2 percent of the country’s GDP. However, Kadin warned that such a program could lead to inflationary pressures and negatively affect investor confidence if not managed properly.
As Indonesia continues to navigate its rapidly evolving business landscape, businesses are looking for clear guidance from policymakers on how they can manage any expansion of government spending while maintaining fiscal discipline. “Prospects” is your go-to source for exclusive interviews and in-depth coverage of Indonesia’s most pressing business issues, helping you stay ahead of the curve as you navigate this challenging environment.
