Indonesia budget deficit swells in January-February

[JAKARTA] Indonesia’s budget deficit swelled to 135.7 trillion rupiah (S$10.24 billion) in the first two months of 2026, amounting to 0.53 per cent of its GDP, as spending soared to fund President Prabowo Subianto’s flagship programmes.

In the same period of last year, the deficit stood at 30.7 trillion rupiah or 0.13 per cent of GDP.

Spending in the January-February period rose 42 per cent compared with the same period a year earlier, reaching 493.8 trillion rupiah, Finance Minister Purbaya Yudhi Sadewa said during a gathering with reporters on Friday (Mar 6), adding that total revenues reached 358 trillion rupiah, up 13 per cent year-on-year.

Investors have been watching Indonesia’s fiscal position closely, concerned that Prabowo’s costly spending plans, including a US$20 billion free school meals programme, could hurt the country’s hard-won reputation for fiscal prudence.

Purbaya reiterated that the government is prepared to cut expenditure to keep the budget deficit under 3 per cent of GDP, the ceiling for the annual fiscal deficit mandated by Indonesia’s state finance laws.

Rating agencies Moody’s and Fitch have this year downgraded the country’s credit rating outlook to negative from stable, citing rising policy uncertainty. REUTERS