Airlangga Claims The Deficit Of The Republic Of Indonesia's State Budget Is Still Better Than Other Countries

Coordinating Minister for Economic Affairs (Menko) Airlangga Hartarto. (Photo: Aris Nurjani/VOI)

Coordinating Minister for Economic Affairs Airlangga Hartarto assessed that the level of deficit in Indonesia's State Revenue and Expenditure Budget (APBN) is still much better than the deficit in other countries.

According to him, this is because the deficit rate is targeted to be below 3 percent.

Even so, Airlangga admitted, there was a trend of increasing the deficit rate.

In 2023, the APBN will experience a fiscal deficit of IDR 347.6 trillion or 1.65 percent of gross domestic product (GDP).

As for the 2024 State Budget, the deficit target is set at 2.29 percent of GDP and then in 2025 in the range of 2.29 to 2.82 percent.

Airlangga emphasized that the government has determined that the 2025 State Budget deficit will be maintained in accordance with the safe limits mandated in the State Finance Act.

"The government also remains committed to the budget where the annual budget deficit will be maintained below 3 percent of GDP. The International Monetary Fund (IMF) sees Indonesia's budget deficit in the range of 2.2 percent this year, much lower than many developers and develop countries in the world," he said at a press conference on the latest economic fundamental conditions and the 2025 State Budget plan, Monday, June 24.

In his presentation, Airlangga said India's deficit was recorded at minus 7.9 percent, China minus 7.16 percent, the United States minus 6.67 percent, Japan minus 6 percent.

Then, Thailand was recorded at minus 4 percent, the Philippines minus 4 percent, Malaysia 3.5 percent, and Norway minus 10.13 percent.

"This means that the budget deficit in other countries is high and we are also relatively better than other countries," he said.

Apart from the fiscal deficit level, Airlangga said that the government's ability to finance the deficit from debt issuance is still quite strong. Due to the level of debt ratio or debt to GDP Indonesia ratio is still much lower than other countries.

Airlangga conveyed that the government's debt ratio was recorded at 38.26 percent of GDP in 2024.

The International Monetary Fund (IMF) projects that Indonesia's government debt in 2024 is still below 40 percent, still far from the 60 percent threshold from the nominal GDP.

In comparison, Airlangga said that Japan has a higher debt-to-GDP ratio of 254.6 percent, Singapore 162.5 percent, and Greece 158.8 percent.

According to him, Indonesia's debt ratio rate is much better when compared to various other countries.

"Why are they big debts? Because the interest is negative. Then America is 123.3 percent of the debt. So it means that with their deficit, other countries are high, we don't need to worry because we stay below 40 percent," he said.

In addition to the deficit and debt ratio, Indonesia's position also shows improvements in competitiveness rankings at the global level.

Airlangga added that Indonesia's competitiveness was also recorded to have increased its ranking to 27th position from 67 countries in 2024.

Quoting research from the Institute for Management Development (IMD) World Competitiveness Ranking (WCR) 2024, Indonesia's competitiveness ranking exceeds England, which is in 28, Japan (38), to India (39).

Even in the Southeast Asia region, Airlangga conveyed Indonesia's competitiveness to 3 large after Singapore (1), and Thailand (25).

This is a significant achievement considering that in 2023, Indonesia is still in position (34).