Indonesia's 2025 Budget Deficit Expands to 2.92% of GDP

Economic Challenges and Fiscal Performance

Indonesia's 2025 budget deficit widened to 2.92% of GDP, totaling Rp 695.1 trillion, as the government faced significant economic challenges ³

. The Ministry of Finance reported that this expansion was primarily due to lower-than-expected tax revenue and increased government expenditure.

Revenue Shortfall

Tax revenue collection fell significantly short of targets, reaching only Rp 1,917.6 trillion, or 87.6% of the projected Rp 2,189.3 trillion. This resulted in a substantial shortfall of Rp 271.7 trillion ⁴

. The revenue shortfall was a major contributor to the widening deficit, despite the government's efforts to maintain fiscal discipline.

Government Expenditure

The government's expenditure pattern showed significant variations across different categories. Central government spending reached Rp 2,602.3 trillion, or 96.3% of the budgeted Rp 2,701.4 trillion ⁵

. Within this, ministry/institutional spending surged to Rp 1,500.4 trillion, representing 129.3% of the original budget of Rp 1,324 trillion ¹

Source 1

https://nasional.kontan.co.id/news/belanja-kl-membengkak-hingga-1293-pada-2025-ini-penjelasan-pemerintah

²

Source 2

https://nasional.kontan.co.id/news/wamenkeu-ungkap-alasan-pembengkakan-belanja-kl-2025

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Budget Realignment

The substantial increase in ministry/institutional spending was attributed to budget reallocations and additional expenditures. According to Deputy Finance Minister Suahasil Nazara, some non-ministry/institutional budget items were reclassified as ministry/institutional expenditures, contributing to the significant increase ¹

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Economic Growth

Despite the fiscal challenges, Indonesia's economic growth remained robust. Finance Minister Purbaya Yudhi Sadewa estimated that Q4 2025 GDP growth reached 5.45%, although this was slightly below the initial target of 5.7%. The growth was still higher than previous quarters, indicating a positive economic trajectory ⁴

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Fiscal Policy Response

Coordinating Minister for Economic Affairs Airlangga Hartarto emphasized that the budget deficit was not a major concern as long as economic growth was maintained. The government appeared to prioritize growth support over strict deficit reduction, keeping the deficit below the 3% threshold mandated by law ³

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