Indonesia’s budget cushions consumers against global economic shocks
KSSK says fiscal support has protected purchasing power while the government has kept its deficit below 3 per cent of GDP.
Indonesia’s budget helps protect household purchasing power and sustain economic growth when overseas shocks hit, according to Herman Saheruddin, secretary of the Financial System Stability Committee (KSSK).
Speaking at a briefing in Surabaya, Herman explained that fiscal policy works countercyclically: the budget absorbs external pressures to delay their impact on consumers while supporting economic activity at home.
He pointed to energy costs as an example, saying budget support had helped prevent global price increases from immediately pushing up domestic fuel prices. A decline in international crude prices, from above US$100 a barrel to around US$92 a barrel, has also supported that buffer.
Alongside targeted subsidies and social protection programmes, the government has sought to maintain confidence in public finances. It has kept the fiscal deficit below the legal ceiling, set at 3 per cent of gross domestic product.
Economic growth reached 5.47 per cent year-on-year during the third quarter of 2026, exceeding that of several regional and G20 economies. KSSK expressed optimism that further energy price declines would lessen external pressure and allow more scope for economic expansion.
