Indonesia's 2025 Budget Agreement: Key Insights and Updates
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Indonesia's 2025 Budget Agreement Overview
An Indonesian parliamentary committee and the government have made significant strides in finalizing the key economic assumptions for the 2025 budget. This crucial step comes as the new administration, under the leadership of Prabowo Subianto, sets to take office soon. The chair of the budget committee has confirmed that most of the original assumptions proposed by outgoing President Joko Widodo have been approved.
Revised Economic Assumptions
Among the original proposals, there are some noteworthy adjustments. The projected rupiah exchange rate against the dollar has been slightly strengthened from 16,100 to 16,000 per dollar, demonstrating a small but positive shift. Additionally, the target for oil lifting has been revised upward from 600,000 to 605,000 barrels per day (bpd), reflecting an optimistic outlook for the oil sector.
Bond Yield Adjustments
In line with current economic conditions, the committee also lowered the 10-year bond yield target from 7.1% to 7%, adjusting to more favorable financial circumstances. These changes indicate a tailored approach by the government to meet the needs of the Indonesian economy moving forward.
Stability in Other Key Indicators
The remaining budget assumptions remained unchanged, which brings a sense of stability to the overall economic plan for 2025. The GDP growth target has been set at 5.2%, and the inflation rate maintains a target of 2.5%. These benchmarks are crucial for economic planning and investor confidence.
Forecast for Oil Prices and Revenue Projection
The forecast for Indonesia's average crude oil price is pegged at $82 per barrel, with natural gas production anticipated at about 1.005 million barrels of oil equivalents per day (BOEPD). In terms of finances, revenues are tentatively agreed upon at 3,005.13 trillion rupiah (approximately $194 billion), while expenditures are projected at 3,621.31 trillion rupiah. This indicates a continuing focus on managing the budget deficit, which is forecasted to narrow to 2.53% of GDP, slightly improved from the expected 2.7% gap in 2024.
Parliamentary Vote Ahead
A wider parliamentary vote is required for the formal approval of the 2025 budget, which is expected to take place later this month or in the following month. The committee's endorsement of these budget assumptions typically paves the way for a smooth parliamentary process.
Frequently Asked Questions
What are the key assumptions for Indonesia's 2025 budget?
The key assumptions involve the exchange rate, oil lifting targets, and adjustments in bond yields, reflecting a more positive economic outlook.
Who is the new leader responsible for presenting the 2025 budget?
The new administration will be led by Prabowo Subianto who will take office shortly.
What has been the impact of the revised currency exchange rate?
The rupiah exchange rate has been strengthened to 16,000 per dollar, indicating a slight improvement in economic conditions.
How much is the expected budget deficit for 2025?
The budget deficit for 2025 is forecasted at 2.53% of GDP, showing a decrease from the previous year's expected gap.
What are the projected oil production figures for Indonesia?
Indonesia's oil lifting target has been raised to 605,000 barrels per day, reflecting enhanced production capabilities.
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