Truly, we respect the gentlemen and ladies. Today, the working meeting of the Budget Agency is discussing the macroeconomic framework and the main points of fiscal policy for 2027, of course, with the government work plan.
Ladies and gentlemen, in accordance with the rules, 57 people are present and attended by seven factions, and that means the meeting is a quorum. With your permission, ladies and gentlemen, we open it and it is open to the public. Agreed?
Ladies and gentlemen. First, I ask for your permission that after the working meeting, ladies and gentlemen, members of the budget agency and leaders, this working meeting will form working committees consisting of the basic assumptions working committee, fiscal policy, revenue, deficit and financing, the 2027 government work plan working committee, the central government policy working committee, and the regional transfer working committee. Agreed?
Good. Ladies and gentlemen, we have received materials from the government. We have carefully reviewed the proposed macroeconomic framework and the main points of fiscal policy for 2027, which we will abbreviate as KEM PPKF 2027, submitted by the government.
We appreciate when our president created a new state tradition by speaking directly at the plenary session to convey the KEM PPKF for 2027. Ladies and gentlemen, the government proposes 2027 macroeconomic assumptions with details: economic growth of 5.8% to 6.5%, inflation of 1.5% to 3.5%, the rupiah exchange rate of 16,800 to 17,500, government bond yields of 6.5% to 7.5%, the Indonesian Crude Price of 70 to 95 USD per barrel, oil lifting of 602,000 to 615,000 barrels per day, and gas lifting of 934,000 to 977,000 barrels of oil equivalent.
High and sustainable economic growth is very important as a national strategy to become a high-income country. We have asked Bank Indonesia to participate in supporting economic growth. It is also very appropriate for Danantara, which has assets of tens of trillions, to participate in shouldering the task of driving economic growth, and Danantara's responsibility must be quantifiable through calculations by BPS. In carrying out the economic strategy, it must be inclusive. Therefore, the logic of fiscal policy must encompass an orchestration of policies between economic growth targets, poverty reduction, unemployment, and social inequality, all of which are accelerating.
Currently, we are facing serious pressure on the exchange rate and government bond yields. Meanwhile, on the stock exchange, our composite stock price index shows a declining graph. Alhamdulillah, today our composite stock price index rose 4.8%.
Ladies and gentlemen, the first thing we need to do is open ourselves to criticism and input, as it is a mirror for ourselves. We summarize a number of inputs from rating agencies, academics, and economists. The government needs to restore the trust of business actors. At least three steps are needed. The government needs to maintain policy consistency. Policy uncertainty is a major risk for business actors. The government should not announce policies that are still premature and instead build productive multi-stakeholder dialogue on various policy plans.
The government needs to manage healthy fiscal policy. We appreciate the government's proposal to submit a 2027 state budget deficit of 1.8% to 2.4% of GDP. This is very encouraging news. Hopefully, it will be more convincing to the market, especially if this year's deficit realization can be lower, at least 2.58% from the APBN target of 2.68% from the existing realization. Hopefully and Alhamdulillah, our deficit in 2025, audited, was not 2.92% of GDP of 23.821 trillion, but our deficit in 2025 was 2.81%. We appreciate the government.
Ladies and gentlemen, in 2027 we will still bear the maturity of interest and principal debt. At the same time, we are faced with the demand to raise debt financing. The government estimates government bond yields at 6.5% to 7.3%. We hope the government will continue to consider these various things. If government bond yields must be higher, we hope it can be offset by productive spending that brings in revenue increases, as it is in line with economic growth. Because the tax-to-GDP ratio over the last three years has relatively declined.
The 2027 KEM PPKF offers eight national priority work program clusters: food sovereignty, energy and water sovereignty, education, health, downstreaming and industrialization, infrastructure, housing and disaster resilience, people's economy and villages, and poverty reduction. The eight programs are a continuation of our medium and long-term development. BMKG warns us to be prepared to face El Niño Godzilla or a very long and prolonged dry season. This situation could threaten the food and water sovereignty programs. Therefore, mitigation must be done as early as possible by the government.
Apologies. We all realize that political turmoil rises and falls like a roller coaster. Learning from the Russia-Ukraine war and the Gulf War, the dynamics are quite long. Food programs require a marathon strategy, requiring long and sustainable breath, while also being clever at seizing opportunities so that domestic food and energy policies become more resilient to national and external turmoil.
In terms of energy sovereignty, there are two priority things that need to be expedited by the government. The government needs to change direction so that production and consumption are synchronized. We export coal to support the world, but domestic energy consumption is from imported fuel. This asynchrony makes the energy policy budget very expensive. It is already very expensive and still has the potential to experience supply disruptions. Even more tragically, we bear the cost of expensive energy imports. However, the implementation of energy subsidies is less targeted. The function of energy subsidies is to absorb economic shocks as a shock absorber for poor households. Thus, the program is expensive but distributed less targeted from year to year.
Ladies and gentlemen, industrialization and downstreaming are two priority programs by President Prabowo to become an industrial nation, with the contribution of industry to GDP being at least 30%. We are currently still at 19% of GDP. In addition, our industrial growth is still below GDP growth on average. The slowdown in the industrial sector impacts the shrinking of the national middle class, and fewer people work in the formal sector compared to the informal sector.
Ladies and gentlemen, before us are the Minister of Finance of the Republic of Indonesia, the Governor of Bank Indonesia, and the Head of BAPPENAS. This shows the real presence of the state not only in the budget agency, but also what will be conveyed to show the public that the three are in agreement, both in fiscal and monetary matters, to maintain the investment climate, to jointly drive productive real sectors, and to maintain our rupiah, which, Alhamdulillah, today our rupiah has appreciated from 18,190 to today 18,022. God willing, hopefully with the hard work of the fiscal and monetary policy mix, the Minister of Finance, the Governor of Bank Indonesia, and all their staff, God willing, at least next week or in 2 weeks or 3 weeks, we build realistic optimism so that the rupiah can recover, at least in 3 weeks to Rp17,500 per US dollar.
