JAKARTA – Finance Minister Sri Mulyani Indrawati presented the 2026 Macroeconomic Framework and Fiscal Policy Guidelines (KEM-PPKF) during a plenary session of the House of Representatives (DPR RI) on Tuesday (20/5).

This strategic document will serve as the foundation for drafting the 2026 State Budget (RAPBN), and was prepared with consideration for the uncertainties and dramatic changes in the global economic order.

Sri Mulyani emphasised that the world is experiencing a major shift from multilateral cooperation to economic fragmentation and protectionism.

“Globalisation has shifted into fierce competition and inward-looking principles like ‘my country first’, triggering supply chain disruptions and increasing risks and global transaction costs,” she said in her official statement, quoted on Wednesday (21/5).

According to projections from the International Monetary Fund (IMF), global economic growth in 2025 is expected to reach just 2.8%, down 0.5 percentage points from pre-tariff conflict forecasts. Indonesia’s own growth outlook has also been revised down from 5.1% to 4.7% for 2025 and 2026.

The government aims to boost investment, improve the business climate, and undertake deregulation to enhance competitiveness.

Fiscal instruments, including tax incentives and government spending, will be focused on supporting businesses and protecting the public.

The 2026 fiscal policy focus is directed at strengthening food, energy, and economic resilience to build a strong and self-reliant Indonesia.

One key aspect is efficiency in government spending. Sri Mulyani stated that the government will evaluate the performance of ministries and agencies over the next two months before setting budget ceilings.

This aligns with President Prabowo Subianto’s priority programmes as outlined in the Asta Cita 8, ensuring the budget is directed towards areas that have a direct impact on the public.

The macro-fiscal posture in the 2026 KEM-PPKF includes projected state revenue of 11.71%–12.22% of GDP, with state expenditure ranging from 14.19%–14.75% of GDP.

The budget deficit is expected to remain in the range of 2.48%–2.53% of GDP. On macroeconomic assumptions, economic growth is targeted at 5.2%–5.8%, inflation at 1.5%–3.5%, and the rupiah exchange rate at IDR 16,500–16,900 per US dollar.

The government is also targeting improvements in socio-economic indicators, including reducing the poverty rate to 6.5%–7.5%, lowering the open unemployment rate to 4.44%–4.96%, reducing the Gini ratio to 0.377–0.380, and raising the Human Capital Index from 0.56 to 0.57.

These measures not only take into account the transition of government, but also serve as a stepping stone toward the Golden Indonesia 2045 Vision. (EF/ZH)