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President Prabowo Subianto's sweeping and poorly communicated budget reallocations shook Indonesian markets in the first quarter, and foreign investors exited. (Nikkei montage/Source photos by Reuters and Yuki Kohara)

Global bond market turmoil shakes Indonesia, risking Prabowo's spending plans

High proportion of domestic bond holdings, healthy FX reserves provide some protection

JAKARTA -- U.S. tariffs and global market turmoil could derail Indonesian President Prabowo Subianto's expansive spending plans. While experts see Indonesia's fiscal position as stable, global pressures could find the government forced to trim spending or issue debt.

The U.S.-China trade truce last week also offers a breather and the Indonesian government has talked up the chances of reaching its own deal. But uncertainties linger, with global bond markets bruised by U.S. President Donald Trump's inflationary trade policies.

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