Executive Summary

Key insights and market outlook

Indonesia's budget deficit for 2025 widened to 2.92% of GDP (Rp 695.1 trillion) from the initial target of 2.53%, as the government implemented countercyclical policies to support economic growth ⁴

. The government borrowed Rp 736.3 trillion in 2025, reaching 94.9% of the targeted amount ⁵⁶. Despite the increase, Finance Minister Purbaya Yudhi Sadewa assured that the deficit remains within the 3% safe limit mandated by law ⁴.

Full Analysis

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Deep Dive Analysis

Indonesia's 2025 Budget Deficit Expands as Government Boosts Borrowing

Wider Deficit for Economic Support

Indonesia's budget deficit for 2025 has widened to 2.92% of GDP, amounting to Rp 695.1 trillion, exceeding the initial target of 2.53% ⁴

. Finance Minister Purbaya Yudhi Sadewa explained that this expansion was necessary to maintain economic stability through countercyclical measures. The government achieved significant budget efficiency, saving Rp 100 trillion through careful financial management ¹.

Increased Government Borrowing

The government borrowed Rp 736.3 trillion in 2025, representing 94.9% of the total target of Rp 775.9 trillion ⁵

. This borrowing was primarily through state securities (SBN) issuance, supporting both deficit financing and investment needs ⁶. The total budget financing reached Rp 744 trillion, exceeding the initial target of Rp 616.2 trillion ⁶.

Program Implementation and Budget Absorption

The nutritious meal program (MBG) successfully absorbed Rp 51.5 trillion of its allocated budget, with direct benefits to society amounting to Rp 43.3 trillion ³

. This demonstrates effective implementation of social programs alongside fiscal management.

Fiscal Policy Considerations

While the widening deficit could raise concerns, Purbaya emphasized that maintaining a deficit below 3% remains a priority, in line with legal requirements ⁴

. The government balanced between supporting economic growth and maintaining fiscal prudence.

References