Government Spending Growth Shows Significant Slowdown

Current Absorption Levels

The Institute for Development of Economics and Finance (Indef) has raised concerns about the current pace of government spending absorption. As of end-November 2025, the central government expenditure reached Rp2,116.2 trillion, representing 79.5% of the Semester Report outlook target and 78.33% of the initial 2025 State Budget ceiling. This absorption rate is notably lower than the same period in 2024, when spending had reached 85.1% of the budget.

Economic Implications

M. Rizal Taufikurahman, Head of Macroeconomic and Finance Center at Indef, suggests that the current absorption level cannot be dismissed as merely a technical or administrative issue. The slower spending pace raises concerns about fiscal deficit management and potential impacts on overall economic growth. The situation necessitates careful monitoring as the fiscal year approaches its conclusion.

Fiscal Policy Considerations

The government faces the challenge of balancing expenditure realization with fiscal deficit targets. The current absorption rate indicates potential difficulties in achieving full budget utilization while maintaining fiscal discipline. Stakeholders are closely watching how this situation develops as year-end approaches.