Saturday, July 13, 2024 | 06:42 WIB

Chatib Basri Appreciates Incoming Government’s Commitment to Keep Fiscal Deficit Below 3%

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Jakarta, IO – Chatib Basri, senior economist and former finance minister (2013-14) appreciated the clarity of the Prabowo-Gibran Synchronization Task Force and the current Finance Minister Sri Muyani who expressed their commitment to maintaining the budget deficit in the range of 2.29 to 2.82 percent of GDP.

Chatib said the fiscal has included the budget for the free school lunch program with an allocation of Rp71 trillion, he wrote in a post on social media platform X, Monday (24/6).

“I appreciate the press conference held by Coordinating Economic Minister Airlangga Hartarto, Finance Minister Sri Mulyani, and head of the Prabowo-Gibran Synchronization Task Force Thomas Djiwandono and Sufmi Dasco.”

He highlighted a number of important signals that financial market players should have taken heed. First, prudent fiscal policy will be continued.

Second, additional new government programs are included in the deficit range. “I think this is very important because the implication is that the current and incoming government will maintain fiscal discipline below 3 percent,” he explained.

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Chatib added that with this deficit range, he estimates that the debt-to-GDP ratio in 2025 will be in the range of 37 to 38 percent. He noted that this is lower than the 2023 ratio that reached 39 percent and much lower than market speculation of 50 percent.

“Amid a global economic uncertainty, where interest rates in the US expected to remain high at least until next year, I think the explanation that fiscal discipline will be maintained is something that is of great significance,” he noted.

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