Agreement Reached on Indonesia’s 2025 Budget Assumptions, Set for Parliament Vote

JAKARTA (Reuters) – An Indonesian parliamentary committee in collaboration with the government has come to an agreement on key economic assumptions for the year 2025. This paves the way for the new administration under Prabowo Subianto, who will assume office next month, as stated by the chair of the budget committee on Wednesday.

The majority of the budget assumptions from the initial 2025 proposal presented by outgoing President Joko Widodo were approved, with notable exceptions regarding the rupiah exchange rate against the dollar, as well as the yield and oil-lifting targets, according to committee chair Said Abdullah.

A broader parliamentary vote is anticipated to approve the 2025 budget, likely taking place later this month or in October. However, the committee’s endorsement typically receives full support.

The projected rupiah value for 2025 was modestly adjusted to 16,000 per dollar from the previous estimate of 16,100. In addition, the oil lifting target was increased to 605,000 barrels per day from 600,000 bpd.

The agreement also included a reduction in the 10-year bond yield target from 7.1% to 7% to better align with current economic conditions and future projections, as explained by the government.

Other essential budget assumptions remained unchanged, with the GDP growth target set at 5.2% and inflation projected at 2.5%. The forecast for the average price of Indonesian crude is projected at $82 per barrel, with oil lifting expected to reach around 1.005 million barrels of oil equivalents per day.

Tentative agreements regarding revenues were established at 3,005.13 trillion rupiah, equivalent to approximately $194 billion, while spending is projected at 3,621.31 trillion rupiah. The budget deficit for 2025 is forecasted to be 2.53% of GDP, reflecting a decrease from the anticipated 2.7% deficit in 2024.