Indonesia is likely to break its 3% of GDP legal ceiling for the fiscal deficit this year. Still, given the low public debt level today, so long as the deficit stayed close to this level it would take until well into the 2030s before fiscal sustainability concerns came to the fore. Nonetheless, there could still be some harmful effects for the wider economy in the meantime. And Prabowo’s broader approach to policymaking risks making the fiscal arithmetic more challenging.
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