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View all search results2026 budget deficit nears limit, fueling fiscal worries
The new finance minister sees no need to relax the legal cap for the fiscal deficit.
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President Prabowo Subianto delivers his State of the Nation address on Aug. 15, 2025, during the annual People's Consultative Assembly (MPR) plenary meeting at the Senayan Legislative Complex in Central Jakarta. (Antara/Rivan Awal Lingga)
T
he projected deficit in the 2026 state budget is edging closer to the legal limit as the government has lifted the targets for both spending and revenue, raising questions over President Prabowo Subianto’s commitment to fiscal discipline.
The House of Representatives' Budget Committee (Banggar) has approved a budget plan that foresees Rp 3.84 quadrillion (US$233 billion) in spending and Rp 3.15 quadrillion in revenue collection next year.
That would leave a fiscal deficit widening to 2.68 percent of the country’s gross domestic product, Banggar chairman Said Abdullah said at a House meeting on Thursday, up from the original forecast of 2.48 percent Prabowo unveiled in August.
Rules capping the annual budget deficit at 3 percent of GDP and accumulated government debt at 60 percent of GDP have long underpinned investor confidence in Indonesia’s fiscal discipline.
While the projected gap remains below the legal ceiling, experts caution that maintaining credibility in financial markets demands strict revenue and spending discipline.
Josua Pardede, chief economist at private lender Permata Bank, said the main risk in the 2026 budget plan was on the revenue side.
At Rp 3.15 quadrillion, the targeted state income is Rp 5.9 trillion above the original proposal, and roughly 10 percent higher than projections for 2025 revenue collection.
