A Critical Constitutional Analysis of Expanding the State Budget Deficit Limit through a Government Regulation in Lieu of Law (Perppu): Assessing the “Compelling Urgency” Requirement

Abstract

This study examines the discourse surrounding the proposed increase in Indonesia’s state budget (APBN) deficit beyond the statutory ceiling of 3% of GDP through a Government Regulation in Lieu of Law (Perppu). The research is motivated by intensifying global economic pressures arising from geopolitical tensions in the Middle East, particularly disruptions to global energy supply chains that may significantly affect Indonesia as a net oil-importing country. Nevertheless, this study argues that external shocks alone do not account for fiscal deficit pressures, as internal fiscal inefficiencies and policy choices may also contribute to the deterioration of the fiscal position. From a constitutional and legal perspective, the proposed policy must be assessed against Law No. 17 of 2003 on State Finance and Article 22 of the 1945 Constitution, as interpreted by Constitutional Court Decision No. 138/PUU-VII/2009, which establishes the constitutional parameters for the issuance of a Perppu based on the existence of a “compelling urgency.” This research employs a normative juridical method complemented by statistical analysis of global oil price movements, fiscal deficit developments, and capital outflow indicators. The analysis focuses on whether the proposed expansion of the deficit ceiling is attributable exclusively to external economic shocks and whether the issuance of a Perppu satisfies the constitutional requirements of a “compelling urgency.” The study argues that the proposed policy may not fully satisfy this constitutional criterion because a portion of the fiscal pressure derives from internally generated inefficiencies, creating what may be characterized as a form of “self-inflicted urgency.” Accordingly, mechanisms provided under the existing budgetary framework, particularly an amendment to the APBN (APBN-P), may constitute a more constitutionally appropriate and procedurally accountable alternative to the issuance of a Perppu.