Indonesian stocks and government bonds tumbled as investors reacted to signals that President-elect Prabowo Subianto's administration may scrap the long-standing deficit ceiling for the state budget. The move sparked concerns about fiscal discipline and potential inflationary pressures in Southeast Asia's largest economy. Traders quickly sold off assets, pushing yields higher and equity values lower.

For years, Indonesia has maintained a strict cap on budget deficits to preserve macroeconomic stability. Removing this constraint could allow for greater government spending but also raises red flags about debt sustainability. Prabowo's team has hinted at expanding fiscal space to fund ambitious development plans, including infrastructure and social programs.

The market reaction underscores investor sensitivity to policy shifts in emerging markets. Indonesian assets, already volatile amid global uncertainty, face additional pressure as the new administration signals potential changes to fiscal rules. The selloff reflects broader concerns about the balance between growth stimulus and fiscal prudence.