5 June 2026 (closed)
Jakarta Composite Index (5,594.77) -245.02 -4.20%
Indonesia’s 2026 Budget Deficit Hits 0.70% through May
Indonesian Finance Minister Purbaya Yudhi Sadewa announced on Friday (5 June 2026) that Indonesia's government budget deficit reached IDR 180.4 trillion (approx. USD $10 billion) in the first five months of 2026. This is equivalent to 0.70 percent of Indonesia's gross domestic product (GDP).
This implies a modestly widening deficit after the 0.64 percent of GDP budget deficit that was reported one month earlier. However, the deficit is significantly larger compared to the same five-month period in 2025, when it reached 0.09 percent of GDP.
Still, concern over an 'out-of-control' fiscal deficit have certainly waned over the past two months. A runaway deficit would force the government to aggressively issue new government bonds (SBN), diluting the market, raising borrowing costs, and driving yields up. The May 2026 data therefore ease concerns as it demonstrates that the cabinet’s aggressive spending push is currently being effectively absorbed and funded by an equally robust domestic revenue collection engine. The fiscal risk has therefore eased significantly on the back of strong tax revenues.
But, considering the budget is running at maximum speed to fund massive structural overhauls (including civil servant salary increases and the phased launch of the Free Nutritious Meals program), this does leave the fiscal balance deeply exposed in case revenues suddenly dry up. And so, if the global economy slows down or commodity windfalls slip in the second half of the year, the government has very little room to cut back on fixed domestic spending commitments.
Indonesia's State Budget (APBN) and Realization up to 31 May 2026 (in IDR trillion):
| State Budget | Realization up to 31 May 2026 |
% of State Budget | Y/Y Growth | |
| A. State Revenue | 3,153.6 | 1,185.0 | 37.6% | 19.1% |
| I. Tax Revenue | 2,693.7 | 958.2 | 35.6% | 18.9% |
| 1. Tax Revenue | 2,357.7 | 834.4 | 35.4% | 22.1% |
| 2. Customs & Excise | 336.0 | 123.8 | 36.8% | 0.7% |
| II. Non-Tax Revenue | 459.2 | 226.4 | 49.3% | 19.9% |
| III. Grants | 0.7 | 0.4 | 67.0% | (1.6%) |
| B. State Spending | 3,842.7 | 1,365.4 | 35.5% | 34.4% |
| I. Central Gov't Spending | 3,149.7 | 1,059.3 | 33.6% | 52.6% |
| II. Transfer to Regions | 693.0 | 306.1 | 44.2% | (4.9%) |
| C. Primary Balance | (89.7) | 58.6 | (65.3%) | (69.5%) |
| D. Surplus/(Deficit) | (689.1) | (180.4) | 26.2% | 763.2% |
| % of GDP | (2.68%) | (0.70%) | ||
| E. Budget Financing | 689.1 | 379.4 | 55.1% | 16.2% |
Source: APBN Kita, June 2026 (Ministry of Finance of the Republic of Indonesia)
When we take a look at the latest release of the Finance Ministry's monthly State Budget update (APBN Kita) then it is interesting to note that it attributes rupiah weakness solely to "external geopolitical matters and global monetary policy". However, there are clearly a number of domestic factors that are making investors decide to sell Indonesian assets (including concerns over a widening fiscal deficit beyond the legally mandated 3 percent of GDP, and specific expensive populist programs such as the Free Nutritious Meals program).
While the budget numbers look reasonably clean, foreign portfolio investors remain particularly cautious amid broader structural shifts happening in Indonesia (and which are related to the budget), such as centralization of export wealth under Danantara and temporary local equity transparency freezes by global indexes (like MSCI) earlier in the year. Investors are balancing the solid fiscal data against a growing tide of state interventionism.