2027 State Budget Aims to Drive Expansive Growth: What’s the Strategy?

Indonesia Sets 2027 Budget Course for Broader Economic Expansion

Tempatdonasi.com – Indonesia’s government is preparing the 2027 State Budget, or APBN, as a central tool for supporting stronger economic activity while keeping fiscal risks under control. The policy direction carries the theme “Grow Higher, Prosper Faster,” reflecting an effort to combine growth initiatives with public protection and longer-term economic restructuring.

Deputy Finance Minister Juda Agung outlined the approach in Jakarta on Friday, October 2, 2026. The budget is intended to serve three connected purposes: stimulating the economy, safeguarding households, and helping reshape the economy for more durable growth.

“The 2027 state budget will be positioned as one source of economic growth with three main functions, namely growing the economy, protecting the public, and supporting economic transformation,” Juda said.

Growth, protection and transformation

The growth component is designed to encourage business activity and investment while helping fund the government’s priority development programs. In practice, this places the APBN at the center of efforts to sustain economic momentum without separating near-term spending decisions from broader development goals.

The protection role focuses on households. The government wants fiscal policy to help preserve purchasing power, support welfare, and promote economic empowerment. This function is particularly important when living costs, employment conditions, or global market shifts put pressure on household finances.

Meanwhile, the transformation agenda is aimed at laying foundations for growth that can continue over the longer term. Juda identified investment, downstream processing, and industrialization as important elements of this effort. The direction suggests that budget policy is not being framed solely around annual expenditure, but also around improving the economy’s capacity to create value over time.

Revenue strategy will rely more heavily on data and enforcement

A sustainable revenue strategy is being prepared to support the budget’s three functions. Tax policy will place emphasis on broadening the tax base through the use of data and technology. The Directorate General of Taxes is expected to optimize Coretax and the Compliance Risk Management Integrated Risk Engine, while strengthening monitoring of strategic taxpayers and those considered higher risk.

For taxpayers, the focus on integrated data systems points to a more technology-driven approach to administration and compliance oversight. Expanding the revenue base is important because public spending plans require dependable funding, especially when the government also seeks to maintain a controlled fiscal deficit.

Customs and excise measures will also contribute to the revenue plan. The government intends to strengthen prevention and enforcement against illegal trade in excisable goods, known as BKC. It will further intensify tariff policies related to tobacco excise, or CHT, as well as import duties on selected commodities.

Other customs-related priorities include widening receipts from export duties and excisable products, improving customs valuation and product classification, and enhancing services and governance. The strategy also links export facilitation with downstreaming and regional economic development, indicating that customs policy is expected to support both state revenue and wider industrial objectives.

Natural resources and non-tax income remain part of the plan

Revenue from natural resources is another area targeted for improvement. The government plans to strengthen governance, further develop the Mineral and Coal Information System, known as SIMBARA, and pursue added value through more environmentally friendly practices.

Non-tax state revenue, or PNBP, is also set for service improvements. Planned measures include standardization, innovation, digitalization, simpler procedures, and stronger compliance. Supervision and law enforcement are expected to play a larger role in supporting these efforts.

These measures matter because the APBN does not depend on a single funding channel. Taxes remain a core source of state income, but customs receipts, resource-related revenue, and PNBP all influence the government’s ability to finance programs while limiting excessive pressure on any one part of the economy.

Deficit Target Set at 2.4 Percent of GDP

On financing, the government intends to keep the 2027 budget deficit at 2.4 percent of gross domestic product. The target signals an effort to preserve room for fiscal support while keeping borrowing and financing within limits described as safe and sustainable.

Domestic funding sources will receive priority under the financing strategy. By relying more on domestic financing, the government aims to reduce exposure to shocks originating in international markets. Debt financing will be used as an anticipatory instrument, alongside active management of cash and debt.

“The main strategy is to maintain a dominant focus on domestic financing, which is relatively less vulnerable to global volatility. Currently, perhaps only 13-14 percent of our Government Securities (SBN) are held by foreigners,” said Juda.

The level of foreign ownership in government securities is relevant because overseas investors can be more sensitive to global interest-rate movements, currency shifts, and changes in risk appetite. A larger domestic investor base may help limit the effect of such fluctuations on government financing conditions.

Broader financing tools

The government also plans to optimize the roles of Danantara, Special Mission Vehicles, Public Service Agencies, and the Sovereign Wealth Fund. Access to financing for low-income communities, referred to as MBR, is expected to be expanded as part of the policy direction.

In addition, the Surplus Budget Balance, or SAL, will be used as a buffer against uncertainty. This reserve can provide added flexibility when revenue, financing conditions, or economic circumstances move away from expectations during the budget year.

The 2027 APBN strategy therefore combines revenue reforms, carefully managed borrowing, household protection, and investment-oriented economic policy. Its central challenge will be ensuring that fiscal support produces broader benefits while the deficit remains contained and financing stays resilient in a changing global environment.