Politics
Indonesia’s 3% deficit cap: guardrail or growth barrier?
Key Points
Indonesia is considering lifting a statutory cap on government spending that has been in place for more than two decades, as President Prabowo Subianto pushes for faster economic growth. Supporters argue that greater room to borrow and spend would let Southeast Asia’s largest economy invest its way towards Prabowo’s target of 8 per cent annual growth by 2029. Economists counter that weakening the rule could push up borrowing costs and dent investor confidence.
Indonesia is considering lifting a statutory cap on government spending that has been in place for more than two decades, as President Prabowo Subianto pushes for faster economic growth.
Supporters argue that greater room to borrow and spend would let Southeast Asia’s largest economy invest its way towards Prabowo’s target of 8 per cent annual growth by 2029. Economists counter that weakening the rule could push up borrowing costs and dent investor confidence.
At issue is the mandatory ceiling...