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>>UOB Cautions About Significant Increase in Indonesia's 2025 Fiscal Deficit Outlook

UOB Cautions About Significant Increase in Indonesia's 2025 Fiscal Deficit Outlook

crypthub

about 5 hours ago

Projected Deficit Rise

UOB analysts warn that Indonesia’s fiscal gap could hit 3.0‑3.2% of GDP in 2025, well above the 3% legal ceiling. Their quarterly model combines government, central‑bank and IMF data. The outlook follows a post‑COVID recovery that saw the deficit fall to 2.4% in 2023.

Key Fiscal Pressures

Revenue growth has slowed despite economic expansion, while subsidy outlays stay high. Normalising commodity prices cut windfall earnings from coal, palm oil and nickel. At the same time, infrastructure and social program spending continue to climb, adding to expenditure burdens.

Market Impact and Policy Options

A wider gap may raise domestic borrowing costs, pressure the rupiah and influence sovereign ratings. Bank Indonesia could face tighter monetary settings to curb inflation. The government can boost tax collection, tighten subsidy targeting and prioritize high‑return projects to contain the deficit.