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

Increased Government Spending Drives Deficit

Indonesia's 2025 budget deficit has widened to 2.92% of GDP, surpassing the initial target of 2.78%. This expansion is primarily attributed to increased government expenditure, particularly by various ministries and government agencies (K/L). The surge in spending is directly linked to the expanded cabinet structure under President Prabowo Subianto's administration ²

Ministry Spending Exceeds Targets

The realization of K/L expenditures reached Rp 1,500.4 trillion by the end of December 2025, representing 129.3% of the initial APBN target of Rp 1,275.6 trillion. This figure also marks a 14% year-on-year increase compared to the Rp 1,315 trillion spent in 2024 ²

Economic Implications and Investor Sentiment

David Sumual, Chief Economist at Bank Central Asia, noted that while the widened deficit might affect investor sentiment towards government bonds, the overall impact is expected to be relatively contained. The deficit remains below the 3% legal threshold, which should help maintain investor confidence ¹

Structural Changes in Government Spending

The significant increase in K/L expenditures is directly related to the expansion of the cabinet from 34 to 48 ministries/agencies. This structural change necessitated additional budget allocations, contributing to the higher-than-expected spending ²