Set goal: A cargo ship in Tanjung Priok Port, Jakarta. Among the targets the government is hoping to hit next year is the eradication of extreme poverty. — AFP
JAKARTA: The government and House of Representatives Commission XI, which oversees financial affairs and other policy areas, have approved the basic macroeconomic assumptions for the 2026 state budget.
The agreement was reached on Monday in a meeting involving representatives of the government, Bank Indonesia (BI) and the Financial Services Authority (OJK).
“With approval from the government, BI and the OJK, all conclusions of the working committee have been officially endorsed,” Commission XI chairman Mukhamad Misbakhun said at the end of the meeting.
Finance Minister Sri Mulyani Indrawati, National Development Planning Minister Rachmat Pambudy, BI governor Perry Warjiyo and OJK chairman Mahendra Siregar attended the meeting.
The assumptions remain unchanged from those set out in the 2026 Macroeconomic Framework and Fiscal Policy Principles.
Economic growth is projected to fall between 5.2% and 5.8%, with inflation targeted at 1.5% to 3.5%.
The rupiah exchange rate is expected to remain within the range of 16,500 to 16,900 rupiah per United States dollar.
The yield on 10-year government bonds is set between 6.6% and 7.2%, slightly lower than this year’s outlook of 6.8% to 7.3%.
The House also endorsed the national development targets, including an open unemployment rate of 4.44% to 4.96% and a poverty rate of 6.5% to 7.5%.
The extreme-poverty rate is targeted to drop to as low as zero to 0.5%, while the Gini ratio is projected at 0.377 to 0.38.
These figures serve as reference points for the government’s fiscal planning and policy in the lead-up to the 2026 fiscal year.
From the second half of 2024 through early this year, Indonesia’s economy showed a mixed performance.
Economic growth remained steady, reaching 5.11% in the fourth quarter of last year, according to Statistics Indonesia.
However, the rupiah depreciated beyond 16,500 rupiah per US dollar, pressured by global uncertainty and continued monetary tightening in the United States.
In response, Indonesia held its benchmark interest rate at 6.25% to help stabilise the currency and curb inflation, which hovered around 3%.
At the same time, the government accelerated efforts to reduce inequality and poverty ahead of the presidential transition last year.
The National Development Planning Agency advanced structural reforms and expanded social protection programmes, targeting the eradication of extreme poverty by next year.
Amid these efforts, the government has set an ambitious target of achieving 8% economic growth by 2029, positioning the 2026 state budget as a stepping stone toward that goal.
Many economists remain sceptical about the feasibility of this projection. Indonesia’s gross domestic product growth has hovered around 5% for the past decade, with the exception of the coronavirus pandemic period, despite successive administrations promising higher economic growth, as low productivity, uneven investment distribution and regulatory hurdles hold back the growth potential. — The Jakarta Post/ANN
