January 8, 2026 | 03:54 pm
TEMPO.CO, Jakarta - Indonesian Finance Minister Purbaya Yudhi Sadewa reported that the state budget deficit for 2025 reached Rp695.1 trillion or 2.92 percent of the Gross Domestic Product (GDP). This budget deficit is higher than the initial target of Rp662.0 trillion or 2.78 percent of the GDP.
According to Law Number 17 of 2003 on State Finances, the maximum budget deficit is 3 percent. Despite the deficit nearly reaching 3 percent, Purbaya assured that the figure did not violate the regulations. "Even though it's inflated, we ensure that it's below three percent," he said during a press conference on the state budget at his office on Thursday, January 8, 2026.
Fiscal deficit occurs when total government spending exceeds the income received within a budget period. Throughout 2025, state spending amounted to Rp3,451.4 trillion, which is 95.3 percent of the target. Meanwhile, state revenue amounted to Rp2,756.3 trillion, which is 91.7 percent of the target.
Purbaya stated that the rising budget deficit, compared to the initial set target, was intended to help tackle economic turmoil throughout 2025. Hence, stimulus spending to boost the economy was necessary.
"You might ask why we didn't cut the spending to reduce the deficit, but we know that when our economy is experiencing a downturn, we need to provide stimulus," he said.
The former Chair of the Board of Commissioners of the Deposit Insurance Corporation considered the increase in the deficit as part of the mission to maintain economic expansion amidst high global pressure. "This is the real counter-cyclical policy that I have often mentioned," he said.
At the end of 2025, Purbaya hinted in a press conference that the budget deficit would increase throughout the year. He stated that high spending amidst weakened state income was the reason for this.
Read: Indonesia Publishes 2026 State Budget; Here's the Details
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