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View all search resultsBudget pressure building
A bloated budget where expenditure growth outpaces revenue growth is typically the hallmark of a crisis. Yet, the official narrative remains sanguine.
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Motorcyclists queue to refuel on Sept. 10 at a gas station in Makassar, South Sulawesi. (Antara/Arnas Padda)
There’s no escaping the fact that fiscal pressure is building as Indonesia heads toward the end of a difficult year.
Despite exceptionally strong growth in revenue, which was up more than 24 percent year-on-year (yoy) nine months into 2026, higher-than-planned expenditure on subsidies makes the budget plan look overly optimistic.
The structural asymmetry is becoming impossible to ignore: A bloated budget where expenditure growth outpaces revenue growth is typically the hallmark of a crisis. Yet the official narrative remains sanguine.
The Finance Ministry has been putting on a brave face while the Middle East conflict has been driving global oil prices back up recently, almost to the highs seen earlier this year after the United States and Israel launched their attack on Iran.
Brent crude was trading at US$113 on Friday, and the average so far this year sits above $90, compared to the assumption of $70 penciled into the state budget plan.
The price gap creates a massive headache for the government, which has promised not to increase pump prices of subsidized gasoline and diesel, while demand has also increased fast as many consumers have moved from costlier fuels to subsidized alternatives.
Concerned about the rate of economic growth, which is strong but not strong enough to keep us on the government’s unrealistic path toward 8 percent, Coordinating Economy Minister Airlangga Hartarto announced last month that the traditional year-end travel incentives would be doled out again over the next three months.
