Indonesia Targets a Return to 3.0% Fiscal Deficit Cap by 2023

Following a waiver of the fiscal deficit cap in 2020, the Government of Indonesia aims to lower the funding gap in 2021, according Febrio Kacaribu, Head of Fiscal Policy at the Ministry of Finance in Indonesia. This is in line with the Government’s target of restoring the fiscal deficit cap at 3.0% of gross domestic product (GDP) by 2023.

According to local media, the Government used an emergency law to waive the deficit cap for 2020 due to COVID-19. This resulted in the widening of the 2020 deficit to an estimated 6.3% of GDP.

Policy makers in Indonesia have stated that a return to fiscal discipline is a key priority for the Government as this is extremely valued by credit rating agencies. Furthermore, it is expected to increase investor confidence in Indonesi...