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View all search resultsIndonesia’s president-elect Prabowo Subianto plans to fund his campaign promises by increasing the Indonesian debt-to-gross domestic product (GDP) ratio by 2 percentage points annually, potentially reaching 50 percent by the end of his term. In response to this unprecedented fiscal policy, Morgan Stanley downgraded its evaluation of Indonesia's equities to "underweight," forecasting short-term economic uncertainty.
Prabowo may eventually be able to implement his expansive fiscal policy if he can get adequate political support at the House to amend the 2003 State Finances Law that limits the deficit to 3 percent but that would cause big risks to the economic stability.
The Finance Ministry’s draft annual financial plan projects significant acceleration in GDP growth next year to surpass the 5 percent that has generally prevailed over the last decade, excepting the COVID-19 and post-pandemic era.
As the world has become more divided, countries have resorted to an unprecedented use of monetary and fiscal tools to protect their economies, Finance Minister Sri Mulyani said on Wednesday, adding that the move had put great pressure on both instruments.
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