TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Apindo calls on incoming govt to raise deficit cap to 5%
The employers association has suggested that the next government stretch the limitation on the state budget deficit from 3 to 5 percent, although an economic aide of the Prabowo campaign says it is unlikely the president-elect would do so.
Change Size
Children play on July 15, 2022 at railroad tracks running alongside a shantytown in Pejompongan, Central Jakarta. (Antara/Hafidz Mubarak Ahmad)
T
he Indonesian Employers Association (Apindo) has called the incoming administration of president-elect Prabowo Subianto to relax the state budget’s mandated deficit cap to 5 percent of GDP.
Currently, the budget deficit is capped at 3 percent as per Law No. 17/2003 on state finances, which also mandates that the government’s outstanding debt should not exceed 60 percent of GDP.
Apindo chairperson Shinta Kamdani said on Monday that raising the deficit cap to 5 percent would give the government more leeway to finance development projects for at least the next five years.
The association’s call comes after the General Elections Commission (KPU) declared on March 20 that Defense Minister Prabowo Subianto was the winner of the presidential election with 58.58 percent of the vote.
“The thing that Pak [Mr.] Prabowo as president-elect can consider for the next five years is relaxing the maximum limit of fiscal deficit to GDP,” Shinta told Bisnis.com on March 25.
The 2003 law set a 3 percent deficit cap to avoid a financial crisis like the one in 1997-1998 that affected Indonesia and other emerging economies.
The only time the government breached this limit was during the COVID-19 pandemic, the impacts of which pushed up the deficit to as high as 6.14 percent of GDP in 2020.
