The Ministry of Finance reported that Indonesia’s State Budget (APBN) deficit as of Sept. 30, 2025, reached Rp371.5 trillion, or 1.56 percent of the Gross Domestic Product (GDP). Despite fiscal pressures, the primary balance remained positive, although still below the 2025 outlook target of 2.78 percent. This condition indicates that Indonesia’s fiscal performance remains relatively stable amid global economic uncertainty.
Responding to this development, a fiscal policy expert from the Faculty of Economics and Business, Universitas Gadjah Mada (FEB UGM), Dr. Rijadh Djatu Winardi, assessed that the 2025 budget deficit remains healthy and manageable.
“A deficit of 1.56 percent of GDP is still within a safe range because the primary balance remains positive and the debt-to-GDP ratio is around 39-40 percent. This means our fiscal policy space is still quite wide,” said Dr. Rijadh on Wednesday (Oct. 22).
According to him, the pressure on this year’s state budget is cyclical rather than structural, primarily due to the decline in global commodity prices, particularly for coal and palm oil, which has affected both tax and non-tax revenues. However, the manufacturing and service sectors continue to contribute positively, helping maintain Indonesia’s fiscal resilience.
Nevertheless, Dr. Rijadh highlighted Indonesia’s low tax ratio, which remains around 10 percent of GDP, significantly below the average of many other countries, which is approximately 20 percent. He emphasized that Indonesia’s narrow fiscal revenue base makes it vulnerable to fluctuations in commodity prices.
On the spending side, realization by the third quarter of 2025 had reached only 62.8 percent of the outlook. Several major ministries and institutions were still below 50 percent, including the National Nutrition Agency (16.9%), the Ministry of Public Works and Public Housing (48.2%), and the Ministry of Agriculture (32.8%).
“This issue is not only technical but also structural. Insufficient budget readiness at the start of the year, a tendency to delay spending (fiscal inertia), and low allocative efficiency are the main causes of low budget absorption,” explained Dr. Rijadh.
He stressed that accelerating budget absorption should be a priority to ensure the state budget’s stabilization function operates optimally. The government needs to expedite procurement processes early in the fiscal year and ensure timely payment mechanisms to avoid year-end spending congestion.
Concluding his remarks, Dr. Rijadh urged that fiscal policy in the remaining months of 2025 focus on sustaining economic growth momentum without compromising fiscal sustainability. The government, he noted, has less than three months to realize around Rp527 trillion in spending.
“The focus should not be merely on exhausting the budget but on ensuring every rupiah is used effectively to support economic growth and public welfare,” he concluded.
Author: Kezia Dwina Nathania
Editor: Gusti Grehenson
Post-editor: Rajendra Arya
Photographs: Radio Idola