The Impact of Fiscal Policy on Economic Growth in Indonesia

Abstract

This paper examines the impact of fiscal policy on economic growth in Indonesia. Fiscal policy, which includes government spending and taxation, plays a crucial role in influencing macroeconomic performance and development outcomes. This tudy uses a descriptive qualitative approach supported by secondary data and relevant literature, this study explores how fiscal instruments such as taxation, government spending, budget deficits, and intergovernmental transfers affect Gross Domestic Product (GDP), employment, and public welfare. The findings show that productive government spending, especially in infrastructure development, education, health, and social protection programs, has a positive contribution to economic growth and economic stability. However, the effectiveness of fiscal policy in Indonesia is still constrained by challenges such as inefficient budget allocation, fiscal deficits, dependence on public debt, and regional inequality. Therefore, strengthening fiscal governance, improving budget efficiency, and enhancing policy coordination are essential to support sustainable and inclusive economic growth in Indonesia.