Sunday, March 22, 2026

War : Survivors, Memory, and Moral Responsibility (19)

War, beneath all its brutality, harbours an inspiration no one asked for—and the Second World War, which killed tens of millions and displaced hundreds of millions more, was perhaps the most paradoxical of all. That the most destructive conflict in human history should also have produced an extraordinary flowering of literary talent remains one of its more uncomfortable ironies, and that Hitler, who did not set out to make great writers, succeeded so spectacularly in doing so remains, one suspects, the least welcome item on his legacy.

Some books announce themselves through their titles alone—titles designed to startle, to provoke, or to send a browser hastily returning the volume to the shelf. Hitler Saved My Life is precisely such a book. And yet for those willing to open the first page, what awaits is something entirely unexpected: a funny memoir, emotionally raw, philosophically alive, and, in the end, genuinely moving.
The book was written by Jim Riswold (1957–2024), a legend of American advertising. He was the creative mind behind Nike’s iconic campaigns of the 1990s—including the celebrated collaborations featuring Michael Jordan, Bugs Bunny, and Charles Barkley. But when leukaemia and prostate cancer struck him simultaneously, Riswold left his creative director’s chair and did something no one anticipated: he became an artist. Not just any artist—he became the creator of satirical photographs featuring miniature figurines of Hitler, Mussolini, Stalin, Mao, and Kim Jong-Il arranged in ridiculous and deeply undignified situations.

When Hitler Saved Someone’s Life
Art, Satire, and Philosophy in Jim Riswold’s Provocative Memoir

Hitler Toys and the Logic of Satire

The first question any reasonable person might ask is: why Hitler? Why not simply paint landscapes or sculpt abstract forms to soothe a troubled soul?
Riswold himself provided the clearest answer in an essay for Esquire. He argued that toys, by their very nature, diminish their subjects—rendering them small, childish, and trivial—the precise opposite of the mythology of grandeur that has long clung to these dictators.
“Instead of providing grand expositions mythologising the dictator, toys, by definition, make their subjects seem small, childish, and trifling.”—Jim Riswold, Esquire, 2005
This is the logic of a satirical tradition with deep roots in both art and politics. From the pamphlets of the French Revolution that depicted kings in compromising postures, to Charlie Chaplin’s merciless lampooning of Hitler in The Great Dictator (1940), the use of laughter as a weapon against tyranny is no novelty. What distinguishes Riswold is the profoundly personal context in which he deployed it: he was not an activist making a political statement, but a man grappling, quite literally, with his own mortality.

In his photographs, Hitler is shown playing with a toy tea set, Mussolini pedalling a tricycle, Stalin soaking in a bathtub. The effect is not merely comic—there is something psychologically liberating at work. By treating figures who once inspired colossal fear as playthings to be arranged and rearranged at will, Riswold accomplished what chemotherapy could not: he reclaimed a sense of agency over something fundamentally beyond his control.

Cancer as an Equal Adversary

The book does not confine its satirical aim to dead dictators. Riswold trains the same irreverent eye on cancer itself—and, more surprisingly still, on the entire industry of grief that so often surrounds serious illness.

There exists an unspoken convention in narratives about cancer: the sufferer is expected to appear courageous, stoical, hopeful, grateful for each remaining day, and, ideally, to discover some form of spiritual meaning in their ordeal. Riswold refuses all of this with spectacular bad manners. He chooses instead to be angry, to swear freely, to make crude jokes, and to mock the genuinely harrowing medical procedures he was forced to endure—from biopsies administered with alarmingly large needles, to interferon injections that left him wretched, to radiation treatment that made him feel, in his own description, as though he were being toasted from the inside out.

The New York Journal of Books described it as the Blazing Saddles of cancer stories—a reference to Mel Brooks’ celebrated Western comedy, notorious for its wilful transgression of good taste.

But beneath all the roughness lies an honesty that disarms. Riswold does not pretend that illness is manageable. He demonstrates, in a manner that only someone who has genuinely sat in a chemotherapy waiting room could, that laughter—even laughter at the most inappropriate of things—is one of the most truthful forms of human endurance available to us.

The Philosophical Dimension: Absurdity, Freedom, and Meaning

There is a philosophical undercurrent running through this book, even if Riswold never claims the title of philosopher. His undergraduate studies at the University of Washington encompassed three degrees simultaneously—communications, philosophy, and history—and that formation is perceptible in the structure of his arguments, however much more colourfully expressed than one would expect in an academic journal.

First, there is an existentialist dimension. Confronted with the real possibility of death, Riswold does not seek metaphysical certainty. He does not offer a story of spiritual epiphany at the operating table. Instead, he chooses to create—to make something that matters to him, even if that something happens to be a photograph of Hitler playing with a tea set. There is an echo here of Jean-Paul Sartre’s proposition that human freedom is most vivid when confronted with nothingness: we are free precisely because we will die, and that freedom demands that we choose how to inhabit the time that remains.

Second, there is the dimension of absurdity as catharsis. The philosopher Henri Bergson, in his essay Le Rire (Laughter, 1900), argued that comedy arises when something rigid suddenly behaves like a mechanism—as when a dignified person slips on a banana skin. Riswold inverts this mechanism: he takes figures who have been mythologised into symbols of horror, rigid and frozen in collective memory, and forces them to perform as ridiculous toys. The laughter that results is not merely entertaining; it is psychologically emancipatory.

Third, there is something that closely resembles healing through making. Viktor Frankl, the Austrian psychiatrist who survived Auschwitz, wrote in Man’s Search for Meaning that human beings can endure even the most terrible suffering, provided they discover meaning within it. Riswold does not cite Frankl, nor does he need to. What he does—transforming pain into art, however absurd that art may be—is a practical demonstration of the idea that creativity can serve as a kind of spiritual anchor in the midst of chaos.

A Satirical Lineage: From Chaplin to Riswold

To understand why Riswold’s book and artwork are something more than cheap provocation, it is worth situating them within a longer satirical tradition.

Charlie Chaplin made The Great Dictator in 1940, when Hitler was still in power, and the outcome of the war remained uncertain. The courage required to ridicule a sitting dictator in those circumstances was not merely artistic—it was a moral statement: that the man was not worthy of the fear he demanded. Mel Brooks, the Jewish-American comedian and director, later produced The Producers (1967), featuring an absurdist Broadway musical on a Nazi theme. When criticised for apparent disrespect towards the memory of the Holocaust, Brooks argued that making Hitler ridiculous was the most effective means of stripping him of the false aura of grandeur he had so carefully cultivated.

Riswold stands in the same lineage, with one crucial difference: his motivation is not primarily political but personal and medical. Hitler, for him, is an instrument rather than a subject—a means of remaining sane, remaining creative, and remaining emotionally present in his own life while his body was under sustained assault from multiple directions.

His photographic works have been exhibited in some museums, a recognition that the art world has identified in them something beyond mere bad-taste humour. There is genuine commentary here on power, on collective memory, and on what happens when we refuse to allow the symbols of historical evil to retain their capacity to intimidate.

Not About Hitler. About Us.

In the end, the book’s title is a brilliantly executed misdirection. Hitler Saved My Life sounds like a provocation engineered to attract attention in a bookshop, and indeed it serves that function. But the heart of the book has nothing whatever to do with Hitler.

This is a book about a man who loves his children so deeply that he is prepared to do almost anything—including the most undignified and illogical things—to remain alive for them. It is about how creativity can become a lifeline when every other lifeline has run out. And it is about how laughter, even laughter that feels unseemly, can be the most profoundly human act of all.

There are moments in these pages that shift, without warning, from hard-edged sarcasm into genuine vulnerability—when Riswold writes about his children, about his fear, about the small things he hoped to witness but could never be certain he would live to see. And precisely because the book never solicits our sympathy, when that sympathy arrives of its own accord, it arrives with considerable force.

A Closing Note

Jim Riswold died on 9 August 2024, aged 66—not from the leukaemia or prostate cancer he had fought so long, but from interstitial lung disease, yet another complication of his prolonged medical history. He left behind a body of artwork, a catalogue of advertisements that had entered the collective memory of millions, and a book that demonstrates there are ways of facing death that require neither grace nor serenity—but instead honest disorder, irreverent laughter, and a camera pointed at a miniature Hitler.

This book is not for everyone. But for those willing to sit with discomfort for a few hundred pages, there is a reward at the end: a fresh understanding of what it means to endure—not elegantly, but in whatever way one can manage, exactly as one is.

Jim Riswold, Hitler Saved My Life. Regan Arts, 2017. 206 pp.
Available in print and e-book editions (Kindle/epub).
[Part 20]
[Part 18]

Friday, March 20, 2026

EID UL-FITR REFLECTION 1447 AH / 2026 CE

بِسْمِ اللَّهِ الرَّحْمَنِ الرَّحِيمِ
Allahu Akbar, Allahu Akbar, Allahu Akbar, Laa ilaaha illallahu Allahu Akbar,
Allahu Akbar wa Lillahil Hamd.

Returning to Fitrah, Weaving New Hope

When the Ied day arrived, the sky felt brighter than ever. The sound of takbir resounds in every corner of the land, stirring the hearts of those who have been tried throughout a month of patience and sincerity. Eid ul-Fitr has arrived—the long-awaited day, the crowning glory of all the striving that Ramadan demands.

Yet behind the outpouring of joy, there is a question we ought to ask ourselves with honesty: Have we truly returned to our fitrah?
 
I. The Meaning of Fitrah We So Often Forget

The term “Eid ul-Fitr” is commonly understood to mean “the festival of breaking the fast”—and so it is. Yet the word fitri derives from the Arabic root fitrah—the original purity, the innate goodness that Allah placed within every soul at birth. Every child enters this world in a state of pristine innocence, with a heart as clear and unblemished as a brand-new mirror.

The journey of life then arrives in all its varied hues: the temptations of the world, heedlessness, wrath, pride, and sins that gradually cloud that mirror. Ramadan comes as a workshop of the soul—a full month during which we are invited to cleanse that mirror once more, to polish it through fasting, night prayers, charity, and sincere repentance.

Eid ul-Fitr is the day on which we ought to stand as renewed human beings—not merely in a change of garments, but in a change of habits, a change of perspective, and a fresh commitment to Allah and to one another.
 
II. The Lessons of Ramadan We Must Not Leave Behind

For a whole month, we fasted. We abstained from food and drink from dawn until sunset. Yet true fasting is not merely refraining from eating and drinking—it is a discipline of restraint from all that distances us from Allah: holding the tongue from backbiting, guarding the eyes from what is forbidden, and keeping the heart free from envy and spite.

For a month, we were taught that a human being is capable of far more than they realise. We were able to rise in the final third of the night to supplicate in solitude. We were able to give to those in need, even whilst fasting ourselves. We were able to restrain the desires that we had long allowed to reign over us.

The question now is: will all of this come to an end today? Will we, the moment Shawwal begins, revert to the very same people we were before Ramadan?

The scholars have said that the sign of one’s Ramadan being accepted is that they become better after Ramadan—not a return to who they were before, and certainly not a regression. Eid ul-Fitr is not the finishing line; it is the starting line of a more meaningful life.
III. Sincere Forgiveness, Not Mere Tradition

One of the most beautiful customs of Eid ul-Fitr is the seeking and granting of forgiveness. We shake hands, embrace one another, and offer words of reconciliation. Yet have we truly forgiven? Not merely mouthing pleasant words whilst the heart still nurses a grudge or carries the weight of old wounds?

To forgive is a mark of greatness of spirit. The Prophet ﷺ  said that the strongest person is not the one who overpowers others in a fight, but the one who can govern themselves when overcome by anger. Forgiving is not a sign of weakness—it is the highest form of strength a human being can possess.

On this blessed day, let us find the courage to forgive: to forgive our parents for their shortcomings, to forgive siblings and friends who have caused us pain, and even to forgive ourselves for the weaknesses and transgressions of the past. A heart unburdened by resentment is a heart prepared to receive the mercy of Allah.
 
IV. Hope for a Better Tomorrow


We celebrate Eid ul-Fitr 1447 AH in a world that continues to move rapidly and is filled with uncertainty. In many corners of the globe, our brothers and sisters still endure hunger, conflict, and suffering. Closer to home, there are still many who are in need of a helping hand.

The spirit of Eid ul-Fitr ought to compel us not only to give thanks for the blessings we enjoy, but also to extend our compassion to others. The zakat fitrah we fulfilled before the Eid prayer is a living symbol that our own joy remains incomplete so long as others continue to suffer.

Let us make this Eid ul-Fitr the turning point at which we become more caring, more generous, more honest in our work, and more trustworthy in discharging our responsibilities — whether as individuals, as members of our families, or as part of the wider community.

Dear brothers and sisters in faith,

Eid ul-Fitr is not merely about ketupat, new clothes, and festive envelopes. It is about the awakening of the soul. It is about our return to our truest selves—as humble servants of Allah, as human beings who cherish one another, as stewards upon this earth who bear their responsibilities with honour.

May Allah accept all our acts of worship throughout Ramadan. May we be counted amongst those who have returned to fitrah—clean, pure, and ready to face the days ahead with greater resolve. And may this Eid ul-Fitr be the finest we have ever celebrated.

تَقَبَّلَ اللَّهمِنَّا وَمِنْكُمْ
Taqabbalallahu minna wa minkum—May Allah accept (our worship) from us and from you.
Happy Eid ul-Fitr 1447 AH
Minal Aidin Wal Faizin

Thursday, March 19, 2026

Widening Indonesia’s National Budget Deficit

Fiscal policy represents one of the government’s principal instruments for managing the national economy. A budget deficit—the condition in which government expenditure exceeds revenue—is a strategic choice frequently made, particularly when facing economic pressures, the need for large-scale infrastructure investment, or crises requiring immediate fiscal intervention.

Indonesia, as a developing nation aspiring to achieve advanced-economy status by 2045, faces a complex fiscal dilemma. On one hand, spending requirements for infrastructure, education, healthcare, and social protection are enormous. On the other hand, the state’s revenue capacity remains constrained, with the tax-to-GDP ratio hovering around 10–11%—well below the OECD average of 34%.

The current 3% of GDP deficit ceiling reflects a compromise between spending needs and fiscal prudence. Nevertheless, a wide range of stakeholders—academics, international institutions, and politicians alike—frequently debate whether this threshold remains relevant, and whether a measured widening could accelerate development without sacrificing economic stability.

This essay aims to provide a balanced, evidence-based analysis of the various aspects—both positive and negative—of a policy to widen Indonesia’s budget deficit across several distinct scenarios.

THE LEGAL FRAMEWORK AND INDONESIA’S FISCAL CONTEXT
Legal Constraints on the Budget Deficit

Law No. 17 of 2003 on State Finance establishes a maximum budget deficit of 3% of GDP and caps total government debt at 60% of GDP. These thresholds align with the Maastricht Criteria applied by the European Union, reflecting Indonesia’s commitment to fiscal discipline since the Reform Era (Reformasi).

In extraordinary circumstances, the government has previously granted exceptions. During the COVID-19 pandemic (2020–2022), through Government Regulation in Lieu of Law No. 1 of 2020 (subsequently enacted as Law No. 2 of 2020), the 3% ceiling was suspended and the deficit reached 6.14% of GDP in 2020—the highest in Indonesia’s modern history. The government set a fiscal consolidation target of returning to the 3% threshold by 2023, which was successfully achieved. 

Current Fiscal Conditions

Indicator

2019

2020

2021

2022

2023

2024*

Deficit (% of GDP)

-2.20%

-6.14%

-4.57%

-2.38%

-1.65%

-2.70%

Debt Ratio (% of GDP)

29.8%

38.5%

41.0%

39.7%

38.6%

39.2%

Tax Ratio (% of GDP)

9.8%

8.3%

9.1%

10.4%

10.2%

10.3%

Economic Growth

5.02%

-2.07%

3.69%

5.31%

5.05%

5.00%

Inflation

2.72%

1.68%

1.87%

5.51%

2.61%

2.51%

 Table 1. Key Fiscal Indicators for Indonesia, 2019–2024 (* estimates) | Sources: BPS, Ministry of Finance, Bank Indonesia


MULTI-SCENARIO DEFICIT ANALYSIS

To provide a comprehensive analysis, this essay organises its discussion around four distinct deficit scenarios, each characterised by a different profile of risks and opportunities.

Scenario

Deficit Threshold

Additional Fiscal Space*

Risk Level

Scenario A

3% – 4% of GDP

IDR 150–180 trillion

Moderate

Scenario B

4% – 5% of GDP

IDR 300–350 trillion

Significant

Scenario C

5% – 6% of GDP

IDR 450–500 trillion

High

Scenario D

Above 6% of GDP

> IDR 600 trillion

Very High

 Table 2. Summary of Deficit Scenarios | *Estimated additional fiscal space relative to the 3% of GDP ceiling


Scenario A: Deficit of 3–4% of GDP (Measured Expansion)
Positive Aspects and Advantages

• Provides additional fiscal space of approximately IDR 150–180 trillion per annum, which can be allocated to infrastructure, healthcare, and education spending without compromising other priority programmes.
• The crowding-out effect on the private sector remains relatively limited, as the additional financing requirement can still be absorbed by the market without placing significant upward pressure on interest rates.
• The risk to fiscal reputation remains contained: international credit rating agencies—Fitch, Moody’s, and S&P—would generally maintain Indonesia’s investment-grade status, provided the widening is temporary and accompanied by a credible consolidation plan.
• The resulting economic stimulus could raise GDP growth by 0.2–0.5 percentage points through the fiscal multiplier effect of government spending, particularly in the construction and services sectors.
Negative Aspects and Disadvantages
• Requires an amendment to, or exception from, the State Finance Law—sending a negative signal regarding Indonesia’s long-term fiscal commitment.
• Moderate pressure on the Indonesian rupiah, particularly if the additional deficit financing is reliant on foreign investors who are sensitive to changes in global conditions (risk-off episodes).
• Precedent effect: once the threshold is relaxed, political pressure to continue widening it in the future becomes considerably stronger, creating a risk of entrenched deficit bias that is difficult to control.

Scenario B: Deficit of 4–5% of GDP (Aggressive Expansion)
Positive Aspects and Advantages

• The significant additional fiscal space (IDR 300–350 trillion) could fund large-scale transformation programmes, such as acceleration of industrial downstream processing, the development of the new capital city Nusantara (IKN), and ambitious social programmes—such as a nationwide free nutritious meals scheme—at full scale.
• If directed towards high-multiplier expenditure (productive infrastructure, research and technology, human capital development), this could drive growth towards the 6–7% of GDP range per annum—the rate required to escape the middle-income trap.
• In the context of a global economic slowdown, fiscal expansion at this level could serve as an effective buffer, reducing Indonesia’s dependence on volatile commodity exports.
Negative Aspects and Disadvantages
• A dramatic increase in financing requirements would put upward pressure on Government Securities (SBN) yields. An estimated rise of 50–100 basis points could significantly increase government borrowing costs and worsen debt sustainability dynamics.
• The risk of a credit rating downgrade becomes real. Loss of investment-grade status could trigger a massive capital outflow from the SBN and equity markets, sharply weakening the rupiah and worsening inflation.
• The domestic economy’s absorptive capacity has limits: if government expenditure surges more rapidly than productive capacity, the resulting inflationary pressure will erode the very benefits of the fiscal stimulus.

Scenarios C & D: Deficit of 5–6% and Above 6% of GDP (Extreme Expansion)
Positive Aspects (Limited)

• In a clearly defined emergency—such as a catastrophic natural disaster or a global financial crisis—extreme fiscal expansion may be the only available instrument to prevent economic collapse, as demonstrated during the COVID-19 pandemic in 2020.
• The very substantial spending capacity could, in theory, simultaneously finance the structural transformation of the economy: renewable energy, digitalisation, and industrialisation within a single budgetary period.
 
Negative Aspects and Disadvantages (Dominant)

• Disproportionate fiscal risk: at this level, financing requirements exceed the capacity of the domestic market, compelling the government to rely on foreign-currency-denominated external debt—increasing currency mismatch and the risk of a balance-sheet crisis.
• Strong and persistent inflationary pressure, which could force Bank Indonesia to raise interest rates sharply, thereby suppressing private sector growth momentum.
• Debt spiral: sharply rising interest payments crowd out productive expenditure in future budgets, creating a vicious cycle of fiscal dependency.
• Loss of market and investor confidence: at this deficit level, Indonesia risks a sudden stop in external financing, forcing an abrupt fiscal adjustment far more painful than a planned consolidation.

MACROECONOMIC PERSPECTIVE
Impact on Economic Growth

Keynesian theory holds that government expenditure carries a multiplier effect on the broader economy. However, the magnitude of this multiplier depends heavily on economic conditions, the structure of financing, and the quality of expenditure. Research by Barro (1990) and Blanchard & Leigh (2013) demonstrates that fiscal multipliers in developing economies tend to be larger (1.2–1.5x) when the output gap is negative and interest rates are low.
Indonesia faces an enormous infrastructure investment gap—estimated at USD 1.6 trillion through to 2030. A wider deficit, if channelled into high-quality infrastructure spending, has the potential to generate a return on investment exceeding the cost of debt financing, yielding a net benefit to the economy.
However, these positive effects are only realised if expenditure quality is maintained. Indonesia’s historical experience reveals that low budget absorption rates and fiscal leakage through corruption significantly reduce the effectiveness of fiscal stimulus.
4.2 Inflation Dynamics and Macroeconomic Stability
A significant widening of the deficit can create demand-pull inflationary pressures, particularly if domestic productive capacity cannot absorb the surge in demand. In the context of Indonesia’s continued reliance on imports of capital goods and raw materials, a depreciation of the rupiah triggered by deficit pressures would compound cost-push inflationary forces.
Bank Indonesia would face a policy dilemma: raising interest rates to defend price stability and the exchange rate would suppress economic growth and increase the government’s debt-servicing burden. Conversely, allowing a large fiscal expansion without monetary adjustment risks undermining the credibility of the inflation targeting framework that has been painstakingly built up over many years.

FINANCIAL AND BOND MARKET PERSPECTIVE
Dynamics of the Government Securities (SBN) Market

Indonesia is heavily reliant on the SBN market to finance its budget deficit. Foreign ownership of domestic SBN has historically accounted for 30–40% of total outstanding stock—one of the highest proportions amongst developing economies—making Indonesia highly vulnerable to shifts in global investor sentiment.
A significant increase in the deficit would drive up the supply of SBN. If demand does not grow proportionately, yields will rise, increasing government interest costs and potentially triggering a crowding-out effect on private investment. Estimates suggest that each additional 1% of GDP in deficit could push SBN yields up by 30–60 basis points under normal market conditions.
 
Refinancing Risk and Debt Management
 
Indonesia’s debt maturity profile requires careful management. With an average SBN maturity of approximately 8–9 years, the government must regularly refinance substantial amounts. A higher deficit means a faster accumulation of debt and a larger future refinancing requirement—creating a more significant rollover risk.
Diversification of financing instruments is therefore crucial: green bonds, sukuk, and other innovative instruments can broaden the investor base. However, each new instrument requires time for market development and carries its own pricing premium.

Deficit Scenario

Est. Yield Increase

Impact on Debt Servicing

Foreign Ownership Risk

3–4% of GDP

+30 – 50 bps

Manageable

Moderate

4–5% of GDP

+50 – 100 bps

Significant

High

5–6% of GDP

+100 – 200 bps

Burdensome

Very High

Above 6% of GDP

>200 bps

Unsustainable

Extreme

 Table 3. Estimated Impact of Deficit on the Bond Market | *Estimates based on historical analysis and fiscal modelling


POLITICAL AND FISCAL POLICY PERSPECTIVE
The Political Economy of the Deficit

Budget deficits carry a political dimension that cannot be disregarded. In general, politicians face asymmetric incentives: the benefits of government spending (particularly social transfers and subsidies) are felt directly by voters, whilst the costs of deficit financing are dispersed into the future and remain indirect. This creates a structural bias towards overspending and chronic fiscal deficits.
In the Indonesian context, the APBN deliberation process is an intensely politicised exercise. A broad governing coalition in the House of Representatives (DPR) facilitates the passage of budgets, but also creates pressure to accommodate the interests of numerous factions—which can inflate expenditure and drive the deficit wider.
6.2 Implications for Bank Indonesia’s Independence
An excessively expansionary fiscal policy can threaten the independence of the central bank. When the deficit balloons and market financing becomes difficult to secure at affordable rates, pressure on Bank Indonesia to purchase government securities directly (debt monetisation) intensifies. This precedent is dangerous: uncontrolled debt monetisation is one of the primary causes of hyperinflation throughout economic history.
 
Governance and Expenditure Quality

The effectiveness of fiscal stimulus from a wider deficit depends critically on the quality of public expenditure governance. Indonesia continues to face serious challenges in this regard, including: low budget absorption capacity at the regional level; corruption that erodes the value of public spending; the rigidity of mandatory spending, which narrows the space for productive expenditure; and significant disparities in planning capacity between central and regional governments.

Without fundamental improvements in governance, a wider deficit will simply enlarge an inefficient budget, rather than accelerating development.

Experiences of Developing Economies

Several developing economies have experienced the consequences of an uncontrolled deficit. Sri Lanka (2022) suffered a fiscal crisis and sovereign default following a combination of chronic fiscal deficits, poorly planned tax cuts, and the pandemic—which drained the country’s foreign exchange reserves. Argentina represents the classic case of a country that has repeatedly experienced crises as a result of fiscal indiscipline.
Conversely, India has managed to sustain a deficit in the range of 5–6% of GDP for several years whilst maintaining robust economic growth, underpinned by a deep domestic market and investor confidence maintained through consistent policy communication.

Country

Avg. Deficit (2019–2023)

Avg. Growth

Credit Rating

Notes

Indonesia

2.9% of GDP

3.4% p.a.

BBB/Baa2

Post-pandemic consolidation

India

6.5% of GDP

5.1% p.a.

BBB-/Baa3

Deep domestic market

Brazil

7.2% of GDP

1.2% p.a.

BB-/Ba2

Recurring fiscal crises

Malaysia

4.1% of GDP

3.8% p.a.

A-/A3

Relatively sound debt management

Sri Lanka

9.8% of GDP

-0.6% p.a.

SD/Ca

Default 2022

Germany

1.1% of GDP

0.8% p.a.

AAA/Aaa

Debt brake policy


Table 4. International Fiscal Comparisons | Source: IMF World Economic Outlook, 2024

Lessons from Europe: The Maastricht Criteria and Their Flexibility

The European Union, which inspired Indonesia’s 3% of GDP ceiling, has itself undergone an evolution in the application of its fiscal rules. Following the European debt crisis of 2010–2012 and the COVID-19 pandemic, the EU introduced greater flexibility through a revised Stability and Growth Pact (SGP) in 2024, allowing member states to establish more realistic fiscal consolidation paths tailored to their individual circumstances.

The key lesson is this: it is not the size of the deficit alone that determines fiscal sustainability, but rather the combination of: the state’s revenue capacity; the quality and productivity of expenditure; the depth and liquidity of domestic financial markets; and the credibility and consistency of fiscal policy over the long term. 
CONCLUSIONS AND RECOMMENDATIONS
Synthesis

Based on the multidimensional analysis conducted, it can be concluded that the question is not merely ‘what is the optimal deficit threshold’, but rather ‘how can Indonesia build the fiscal capacity to support sustainable development.’ Widening the deficit can be an effective instrument if, and only if, it is pursued within an appropriate framework.
 
Policy Recommendations
• Conditional deficit widening: Should a wider deficit be pursued, it must be accompanied by a clear sunset clause, automatic fiscal rules, and measurable allocations strictly limited to high-multiplier expenditure whose benefits can be independently verified.
• Strengthening the domestic capital market: Deepening the SBN market through the development of domestic institutional investors (pension funds, insurance companies) in order to reduce dependence on volatile foreign investors.
• Public expenditure reform: Improving the quality and efficiency of government spending through strengthened procurement systems, performance-based regional transfer mechanisms, and better-targeted subsidy reform.
• Structured fiscal-monetary coordination: Establishing clear coordination mechanisms between the Ministry of Finance and Bank Indonesia to prevent fiscal dominance from threatening monetary stability.
 
Closing Remarks

Widening the budget deficit is a double-edged sword. In the right dosage and context, it can serve as a transformative catalyst for growth. However, without strong institutional foundations, consistent revenue reform, and accountable governance, excessive fiscal expansion will merely transfer the burden from the present generation to future ones—a form of intergenerational inequity that cannot be justified even by the most compelling development rationale.
Indonesia does have room to operate more flexibly in the management of its public finances, but the ability and legitimacy to use that room must be earned through a consistent track record of sound policy—not seized instantaneously through the mere relaxation of a legal threshold.

REFERENCES

Barro, R. J. (1990). Government Spending in a Simple Model of Endogenous Growth. Journal of Political Economy, 98(5).

Blanchard, O., & Leigh, D. (2013). Growth Forecast Errors and Fiscal Multipliers. American Economic Review, 103(3).

IMF. (2024). World Economic Outlook: Steady but Slow. International Monetary Fund.

Ministry of Finance of the Republic of Indonesia. (2024). Budget Note and Draft State Budget (RAPBN) 2025. Kemenkeu.

OECD. (2023). Revenue Statistics 2023. OECD Publishing.

Republic of Indonesia. Law No. 17 of 2003 on State Finance.

World Bank. (2024). Indonesia Economic Prospects: Strengthening the Foundation. World Bank Group.

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