Chatib Basri: The Minister of Finance's task to face fiscal pressure is very easy, run three options

JAKARTA - Senior economist and former Minister of Finance (Menkeu) of the Republic of Indonesia for the period 2013-2014, Chatib Basri, said that the task of the Minister of Finance in facing fiscal pressures is actually very easy.

Chatib explained that the task of the minister of finance was simple because it only had three policy options, namely increasing revenue, cutting spending or adding debt.

According to him, the government's fiscal space is currently narrowing amid the global economic slowdown, pressure on the rupiah exchange rate and the potential for energy price increases due to conflicts in the Middle East.

"Actually, the task of the Minister of Finance is very easy. He only has three options, raise, cut, borrow. Only three," said Chatib at the Grab Business Forum 2026 entitled 'The Next Chapter: Scale Smarter, Execute Faster' in Jakarta, Tuesday, June 9.

He explained that the government can basically only increase state revenues, cut spending or close financing needs through debt.

"If you can't raise it, you have to cut it. If you can't cut it, you have to borrow (debt). As simple as that," he said.

However, according to Chatib, raising taxes is not a realistic option in the current economic conditions, because it has the potential to further suppress business activities and people's purchasing power.

"In this situation, tax revenue, the tax must be raised? It's not possible either," he said.

Meanwhile, the option to increase debt is also considered not ideal because the cost of borrowing is expensive as global interest rates are high.

"Who wants to borrow money now, the cost will be very expensive," he explained.

Therefore, Chatib assessed, the most likely step is to carry out selective rationalization of state spending to maintain fiscal credibility.

"So the most likely option is the third, cut the spending selectively," he said.

He gave an example of Indonesia's risk premium reflected in credit default swaps (CDS) which had increased since January 2026, even before the conflict in the Middle East.

According to him, about 23 percent of the weakening of the rupiah can be explained by the increase in fiscal risks reflected in CDS.

"That is, I can say (the question) that we are a matter of confidence risk. So if this issue is addressed, there is actually hope that this can be improved," he said.