JAKARTA- Indonesia sees its annual gross domestic product growth for 2025 in a range of 5.3 percent to 5.6 percent and is aiming for a fiscal deficit of 2.48 percent to 2.8 percent of GDP, its planning minister said on Monday.
SuharsoMonoarfa spoke to reporters after discussing the 2025 state budget plans with President Joko Widodo, who finishes his second and final term later this year.
The president told his cabinet earlier that its 2025 state budget proposal must adjust to the programs of the new president, who will take office in October.
Official data earlier this month showed Indonesia’s annual GDP rate fell slightly to 5.05 percent last year, from the 5.3 percent recorded in 2022, as falling commodity prices hit exports and tight monetary policy dampened demand.
The government has said it expects the growth rate to pick up to 5.2 percent in 2024, hoping spending for an election on Feb. 14 and a return of private investment once political uncertainty eases will boost GDP.
Meanwhile, Indonesia may have to widen its budget deficit to fund a multi-billion-dollar free school lunch program promised by likely new president Prabowo Subianto, showed a briefing document seen by Reuters on Sunday.
Defense Minister Prabowo and running mate Gibran Rakabuming Raka, the eldest son of outgoing president Joko Widodo, declared victory in this month’s presidential election after a quick ballot count on Feb. 14 showed they had won nearly 60 percent of votes, ahead of the official results announcement due by March 20.
President Widodo’s cabinet has since started to calculate the cost of the lunch program, said a person familiar with the matter, declining to be identified as they were not authorized to speak with media.
Analysts said the program could undermine Indonesia’s track record of fiscal discipline.
The document, prepared by the coordinating ministry for economic affairs, showed the program could widen the budget deficit by as much as 0.33 percent of gross domestic product (GDP) in 2025 if introduced across the world’s third-biggest democracy.
The ministry arrived at the figure by assuming each child from one year old through to the end of elementary school – 58 million children – receives one meal a day worth up to 15,000 rupiah ($0.96) or less than $1 for five days a week, for a total cost of 193.2 trillion rupiah ($12.39 billion).
The cost would drop to about a third of that total if the program is only offered to children of low-income households.
The calculations assumed a 2025 budget deficit of less than 2.5 percent of GDP, and 2025 economic growth of 5.3 percent to 5.6 percent , the document showed.
For comparison, the fiscal deficit for 2024 has been set at 2.29 percent of GDP, while the economic growth target is 5.2 percent .
The program will be discussed with President Widodo at a cabinet meeting on Monday, CNBC Indonesia cited Airlangga Hartarto, coordinating minister for economic affairs and a member of Prabowo’s election campaign team, as saying on Friday.
The ministry and the presidential office did not respond to Reuters requests for comment.
Prabowo’s campaign team has said the program will initially require up to 120 trillion rupiah, before reaching 450 trillion rupiah when nationwide coverage is achieved in 2029. -Reuters
