Indonesia's 2026 budget deficit outlook seen at 2.85% of GDP

[JAKARTA] Indonesia’s budget deficit is expected to widen to 2.85 per cent of GDP this year, bigger than originally predicted, a senior lawmaker said on Tuesday (Jul 7), even as the government aims to scale back spending on the president’s flagship school meals programme.

The new estimate, which is close to the legislated deficit ceiling of 3 per cent of GDP, was released by Said Abdullah, the head of parliament’s budget commission, at the start of a hearing with the finance ministry. It is wider than both the government’s previous estimate of a deficit of 2.68 per cent this year and the 2025 budget gap of 2.81 per cent of GDP.

Finance Minister Purbaya Yudhi Sadewa told the hearing that the budget deficit in the first half of 2026 was US$10.9 billion, equivalent to 0.76 per cent of GDP.

Indonesia’s government typically spends more towards the end of a fiscal year because payments for some programmes are authorised after audits. The budget has faced pressure this year from higher energy subsidy costs and capital outflows amid global “risk-off” sentiment, including concerns over huge spending on the free meals programme, with Jakarta looking at cutting spending on it by up to around 40 trillion rupiah (S$2.87 billion) after identifying inefficiencies. REUTERS