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View all search resultsAnalysis: Unmet revenue target, govt pushes faster, stronger tax collection
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Newly appointed Finance Minister Purbaya Yudhi Sadewa sings the national anthem during the handover ceremony from his predecessor Sri Mulyani Indrawati on Sept. 9 at the Finance Ministry in Jakarta. (AFP/Bay Ismoyo)
I
ndonesia will need to accelerate both revenue collection and government spending in the final months of this year, after realizing just over half of the 2025 outlook by the end of August. The Finance Ministry reported that state revenue reached Rp 1.64 quadrillion (US$98.61 billion) as of Aug. 31, or 57.2 percent of the outlook, and realized state spending of Rp 1.96 quadrillion (55.6 percent). This left the 2025 state budget with a deficit of Rp 321.6 trillion, equal to 1.35 percent of gross domestic product (GDP).
On the revenue side, tax collection declined 5.1 percent to Rp 1.13 quadrillion, or 54.7 percent of the outlook. Customs and excise revenue rose 6.4 percent year-on-year (yoy) to Rp 194.9 trillion, or 62.8 percent of the target, with excise contributing Rp 144 trillion. Export duties brought in Rp 18.7 trillion, driven by higher crude palm oil prices and the extension of Freeport Indonesia (PTFI)’s copper concentrate export permit, while import duties fell 5.1 percent yoy to Rp 32.2 trillion as a result of food trade policies and free trade agreements (FTAs). Nontax revenue reached Rp 306.8 trillion, or 64.3 percent of the year’s target.
The National Economic Council recently highlighted that Indonesia’s tax-to-GDP ratio dropped to 8.4 percent in the first half of 2025, well below the regional average of 16 percent. Historical trends show that the government usually realizes 31.5-38 percent of annual revenue in the final four months of the year. With just over half of the target realized and Rp 941.5 trillion still to be collected, revenue realization is projected to reach only 86.2-92.7 percent of the target for 2025.
In response, the Finance Ministry has prepared a package of measures aimed at boosting revenue collection. These include transferring Rp 200 trillion in state funds from Bank Indonesia to five state-owned banks to expand the money supply, collecting between Rp 50 trillion and Rp 60 trillion in tax arrears from 200 large taxpayers with the support of other authorities as well as accelerating fixes to the Tax Office’s Coretax online filing platform. It also plans to intensify efforts to combat the illegal cigarette trade, speed up budget execution by ministries and agencies and strengthen data exchange across state institutions as mandated by Article 35A of the General Taxation Law.
On the spending side, central government spending rose 1.5 percent yoy to Rp 1.39 quadrillion. Spending by ministries and agencies, including spending for social assistance and other government programs, reached Rp 686 trillion, or 53.8 percent of the target. Meanwhile, other central government spending amounted to Rp 702.8 trillion (50.6 percent). Transfers to regional administrations increased 1.7 percent yoy to Rp 571.5 trillion, or 66.1 percent of the target, though regional spending contracted 14.1 percent amid ongoing austerity measures.
By program, social assistance led spending realization at Rp 101.1 trillion, or 67.4 percent of the outlook, followed by health care at Rp 119.6 trillion (54.7 percent). Food security programs absorbed Rp 73.6 trillion (50.9 percent), education Rp 357.1 trillion (49.3 percent) and infrastructure Rp 142.1 trillion (35.3 percent). Meanwhile, programs supporting cooperatives and micro, small and medium enterprises (MSMEs) reached just Rp 15.6 trillion (27.7 percent), while transmigration development was the weakest performer at Rp 103.9 trillion (5.5 percent).
Slow disbursement has been a recurring issue. Finance Minister Purbaya Yudhi Sadewa has announced plans to directly review budget execution at ministries and agencies, warning that unused funds could be reallocated if disbursement lags persist. He has given ministries and agencies until the end of October to present plans to maximize spending.
