Fiscal Sustainability in Indonesia: Policies and Progress

Abstract

This paper investigates fiscal sustainability in Indonesia and draws comparisons with Malaysia and Thailand. The analysis encompasses an evaluation of fiscal rules, fiscal performance, and an assessment of fiscal sustainability across these three countries. Given that the Coronavirus Disease (COVID‐19) pandemic affected budget deficits in each country starting in 2020, the empirical assessment utilizes data from 2010 to 2019. Despite persistent fiscal deficits in each country, the results suggest that all three countries maintain fiscal sustainability. A more detailed analysis of the Indonesian case focuses on government revenue and expenditure. The discussion addresses challenges in these areas, aiming to identify feasible policy options for enhancing fiscal sustainability in Indonesia.