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KN-JAKARTA, It’s common knowledge that state finances are in dire straits. Spending is bloated, but coffers are tight. In the interim realization report for the 2025 State Budget, released last January, state revenues amounted to IDR 2,756.3 trillion, or 91.7 percent of the planned amount. Meanwhile, spending reached IDR 3,451.4 trillion, or 95.3 percent of the planned amount. As a result, a deficit of IDR 695.1 trillion occurred.
This deficit figure is equivalent to 2.92 percent of gross domestic product (GDP). According to Law Number 17 of 2003 concerning State Finances, this deficit is still below the maximum threshold of 3 percent.
In other words, it’s still safe. However, when compared to the 2025 State Budget target, which sets a deficit of 2.78 percent of GDP, the actual figure has widened, almost exceeding the safe limit.
This situation is a concern for many. On the one hand, President Prabowo Subianto refuses to curb spending on his planned projects, such as free nutritious meals, defense spending, funding for red and white village cooperatives, or major projects to be carried out under the umbrella of the Daya Anagata Nusantara Investment Management Agency (Danantara).
This year, the government will disburse Rp 3,842 trillion in state spending, an 8.9 percent increase compared to the 2025 target.
On the other hand, the realization of the Rp 3,153.6 trillion state revenue target, a 10 percent increase from the 2025 outlook, remains questionable. This is especially true with statements from economists, entrepreneurs, and company executives about the sluggish economy.
When the economy slows, tax revenues are certain to be limited unless the government finds new revenue sources. This is where the deficit could potentially exceed the established limit, requiring the government to borrow more to cover it.
The state budget is at risk of a deficit if the war between the United States and Israel and Iran escalates. The surge in global oil prices has forced the government to cover the difference in energy subsidies and compensation.
In the 2026 State Budget macroeconomic assumptions, the oil price projection was set at US$70 per barrel. However, on March 3 and 4, 2026, global oil prices surpassed US$80 per barrel, an increase from the US$70 per barrel at the start of the aggression on Saturday, February 27, 2026.
The war in the Middle East has disrupted the global logistics supply chain. Not only oil prices but the entire global community will also be affected, leading to price increases and increased inflation.
Finance Minister Purbaya Yudhi Sadewa estimates that economic growth in the second quarter of 2026 could reach 5.7 percent. He stated that the government is ready to provide stimulus from various sources if signs of an economic slowdown appear.
In addition to providing stimulus, Purbaya is open to accelerating the realization of spending by ministries and agencies, which is still running slowly. This accelerated spending is considered to accelerate the flow of funds into the economic system while maintaining growth momentum in the second quarter.
The 2026 State Budget was previously approved with total state spending of IDR 3,842.7 trillion. Meanwhile, state revenues were targeted at IDR 3,153.6 trillion, with a budget deficit of IDR 689.1 trillion (2.68 percent of gross domestic product).
Throughout the first quarter of 2026, realized state revenues were IDR 574.9 trillion, while state spending was IDR 815 trillion. Therefore, the State Budget for the first three months of 2026 experienced a deficit of IDR 240.1 trillion, equivalent to 0.93 percent of GDP.
Meanwhile, Deputy Minister of Finance Juda Agung expressed optimism at Bank Indonesia (BI) headquarters in Jakarta on Monday, April 27, 2026, that the Indonesian economy would grow 5.5 percent in the first quarter, an increase from 5.39 percent in the previous quarter. The government will release quarterly economic growth data on May 5.
He stated that the reason behind this confidence is the increase in state revenues, particularly taxes. Juda stated that, on average, from the beginning of the year to March 2026, tax revenue grew by 20.3 percent.
This growth was primarily driven by a 57.7 percent increase in value-added tax (VAT) and luxury goods sales tax (PPnBM). These indicators, Juda said, indicate that economic activity, both consumption and industrial or business transactions, is growing quite well.
