Indonesia's 2026 Budget Deficit Expected to Widen Significantly

Indonesia's government has acknowledged that the budget deficit for the 2026 fiscal year is expected to be larger than initially planned. The projected deficit stands at Rp 734.3 trillion, representing 2.85% of the Gross Domestic Product (GDP). This figure exceeds the planned deficit of Rp 689.1 trillion and is the highest ratio since the pandemic years of 2020 and 2021.

The government's outlook for state revenue in 2026 is Rp 3.208.1 trillion, a 16.02% increase from 2025 and slightly above the APBN target. While this indicates a generally positive revenue performance, the increase is partly attributed to a low base effect from the previous year. Historically, state revenue has shown a consistent upward trend over the past two decades.

However, government spending is projected to rise more sharply, reaching Rp 3.942.4 trillion, which is 14.76% higher than in 2025 and surpasses the planned expenditure. This projected increase in spending is the highest in 15 years, contrasting with a more modest rise in the first year of the current administration. The widening gap between spending and revenue necessitates increased financing, primarily through debt.

The 2026 budget plans for a total deficit financing of Rp 689.15 trillion. A significant portion of this, Rp 832.21 trillion, will come from net debt financing. Non-debt financing will contribute Rp 143.06 trillion. This reliance on debt financing is a key feature of the budget, aimed at covering the projected shortfall.