IMF Staff Completes 2025 Article IV Mission to Indonesia

IMF News, November 14, 2025

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An IMF team led by Ms. Maria Gonzalez conducted the 2025 Article IV Consultation discussions over November 3-12, 2025.
End-of-mission statement issued November 14, 2025, conveying preliminary staff findings; views are those of IMF staff and do not necessarily represent the IMF’s Executive Board.
The team met with officials in the government, Bank Indonesia, Financial Services Authority (OJK), other public agencies, and representatives of the private sector and civil society.

Growth projections:
- Growth is expected to remain steady at 5.0 percent in 2025 and 5.1 percent in 2026.
Inflation:
- Headline inflation is well anchored and projected to converge towards the midpoint of the target range.
Current account and reserves:
- The current account deficit would remain well contained in 2025-26, with comfortable reserves.
External position:
- A preliminary assessment of Indonesia’s external position in 2025 finds it is broadly in line with the level implied by medium-term fundamentals and desirable policies.

Downside risks:
- Escalating trade tensions, prolonged uncertainty, and global financial market volatility.
- Domestic risk from large policy shifts without sufficiently robust guardrails that could build up vulnerabilities.
Upside risks:
- Bolder structural reforms, including faster-than-anticipated push on the trade front.
- Positive spillovers from stronger growth among trading partners.

Fiscal projections:
- Staff expect the fiscal deficit to widen to around 2.8 percent of GDP in 2025, and around 2.9 percent next year.
- These staff projections are based on more conservative growth and revenue projections than those envisaged in the 2026 budget of 2.7 percent of GDP.
Policy recommendations:
- Carefully manage budget execution to secure authorities’ budget target to provide needed fiscal support while preserving fiscal space.
- Continue careful fiscal management and maintain strong safeguards and rigorous oversight of quasi-fiscal operations to keep fiscal risks well-contained.
- Strengthen revenue mobilization with a focus on high-quality spending and spending efficiency to enhance fiscal policy effectiveness in support of growth.

Monetary easing:
- The shift to monetary policy easing, with the realignment of BI’s various instruments in a supportive direction, is appropriate.
- The 150 bps rate cuts and liquidity-enhancing measures should gradually strengthen credit growth.
Forward guidance:
- There may be room for some further policy rate cuts; the extent and pace should be data-dependent, consider lagged effects of BI’s actions already taken, account for the supportive fiscal impulse, and preserve space against external shocks.
Exchange rate and FX intervention:
- Continuing exchange rate flexibility will help absorb shocks.
- Under the IMF’s Integrated Policy Framework, foreign exchange intervention could be part of the policy response given Indonesia’s relatively shallow foreign exchange markets, in case of risk-off shocks that trigger excessive tightening of financial conditions.
- Such interventions would need to balance the need to preserve buffers in a shock-prone world.

System resilience:
- The financial system is broadly resilient.
Macroprudential stance:
- Amid a negative credit gap, a near-term accommodative macroprudential stance is appropriate.
- Gradually starting a shift towards a neutral stance as credit growth builds pace would safeguard against potential macro-financial risks.
Government mobilization of finance:
- As the government seeks to mobilize the financial sector for its growth agenda, ensuring appropriate guardrails will help maintain the sector’s resilience.

Indonesia’s objective:
- Indonesia remains firm in its “Golden Vision” of becoming a high-income country by 2045.
Policy mix and state-led initiatives:
- Authorities have targeted higher growth through a supportive macro policy mix and expanding state-led initiatives, including the downstreaming and self-sufficiency agendas.
Required reforms to raise long-term, inclusive growth:
- Ambitious horizontal structural reforms on infrastructure, deregulation, reducing trade barriers, and further enhancing global integration to boost the supply side and generate strong MSMEs, higher FDI, and a dynamic private sector.
- Closing physical, human capital (education and skills) and institutional (governance and anti-corruption) gaps is critical to increase long-term growth and lift productivity.
Trade integration:
- Staff analysis shows significantly deepening trade integration efforts with major partners—with a focus on reducing non-tariff barriers with complementary structural reforms to boost productivities across sectors—could be an important driver toward high-income status.
- Recent efforts to reduce tariffs and non-tariff barriers and facilitate FDI have delivered on recent announcements of important agreements (Canada, EU-CEPA), while a potential deal with the US is well advanced; full details and implementation remain pending.

IMF staff statement, November 14, 2025.