A member of president-elect Prabowo Subianto’s transition team has stated that the incoming administration will uphold the country’s reputation for fiscal prudence while dispelling concerns raised by investors and international institutions about future state spending. Transition team member Thomas Djiwandono emphasized that the budget deficit and debt-to-GDP ratio would be maintained within the current legal boundaries. He assured that the president-elect is committed to the deficit target agreed upon by the current government and the House of Representatives, as mandated by a 2003 law which restricts the fiscal deficit to not exceed 3 percent of the GDP and the total debt to remain within 60 percent of the GDP. These measures are in place to ensure fiscal discipline and prevent monetary crises like the 1997 Asian Financial Crisis.
At a press conference with officials from the outgoing administration, Thomas Djiwandono, who is Prabowo’s nephew, addressed the concerns about future state spending and fiscal policy. He stressed that Prabowo Subianto is dedicated to maintaining the deficit target agreements and legal boundaries set by the government and the House of Representatives. These constraints have been put in place by a 2003 law to prevent monetary crises and ensure fiscal discipline. Prabowo was reportedly considering an increase in the debt-to-GDP ratio in the state budget to fund the programs promised in his election campaign. However, Thomas has denied these claims and emphasized that fiscal prudence will be maintained under the new administration.
The efforts of the new administration to address concerns about state spending and fiscal discipline are crucial in maintaining Indonesia’s reputation for financial stability and economic growth. By upholding the deficit targets and legal boundaries set by the government, the incoming administration aims to ensure that the country’s hard-earned reputation for fiscal prudence is preserved. This commitment to responsible fiscal policy is essential to prevent future monetary crises and maintain the country’s economic stability in the long term. Through open communication with investors and international institutions, the new administration can address concerns and build trust in Indonesia’s financial management.