Towards the last quarter of 2025, the Ministry of Finance revealed that the absorption of state spending has only reached half of the APBN outlook . In fact, there are still growth targets that must be pursued in the next three months.
For this reason, state spending must be accelerated, although still with careful steps and right targeting priority programs.
The situation was clearly presented in the September 2025 edition of the APBN Kita Press Conference at the Djuanda I Building of the Ministry of Finance, Jakarta, Monday (22/9/2025). In addition to replacing the July 2025 edition of the press conference, which was canceled at the end of August, this event was the first opportunity for Finance Minister Purbaya Yudhi Sadewa to explain state finances in front of journalists.
Purbaya opened the conference by explaining the impact of global economic dynamics on the Indonesian economy. According to him, in the midst of commodity price fluctuations, Indonesia can maximize the manufacturing sector with three provisions.
First, manufacturing performance growth reached 5.68% YoY, the highest since 2022. Second, the Purchasing Manager Index level has reached an expansion level of 51.5. Third, the cumulative trade balance growth has increased to 52.3% YoY.
"This is spectacular growth, showing that the global situation is not too bad. If we were afraid yesterday, now we should be brave, especially since our domestic is strong. Uncertainty still exists, but we are stronger than before," said Purbaya.
Not only in terms of production, Purbaya reported that Indonesia's macroeconomic situation reflects resilience. The indications are that inflation was maintained at 2.31%, investment grew 6.99%, and household consumption grew 5% YoY - mainly supported by food and beverage accommodation, in addition to transportation and communication.
"With investor confidence quickly recovered after the commotion a few weeks ago, and consumer confidence in economic conditions maintained at an optimistic level, our economy will be strengthened going forward. And, we will see better growth in October, November, and December," said Purbaya.
Expenditure realization
Despite the hopeful macroeconomic picture, state revenues and expenditures, which have only reached half of the APBN outlook , are important to highlight and underline.
Deputy Minister of Finance I Suahasil Nazara explained, until 31 August 2025, the realization of state revenues had only reached Rp 1,638.7 trillion or 57.2% of the 2025 State Budget outlook . Meanwhile, state expenditure realized in the same period has only reached Rp 1,960.3 trillion or 55.6% of the 2025 State Budget outlook .
With a deficit of IDR 321.6 trillion or 1.35% of GDP, Suahasil stated that there is still government spending that must be accelerated again.
In detail, of the Rp 1,960.3 trillion in state spending, ministry/institution (K/L) spending reached Rp 686 trillion or 59.1% of the APBN ceiling.
There are three types of expenditure that have increased. Namely, personnel expenditure rose 7.6% to Rp 212.8 trillion; goods expenditure rose 2.4% to Rp 232.2 trillion; and social assistance expenditure rose 5.5% to Rp 101.1 trillion.
This year's education budget has absorbed Rp 357.1 trillion or 49.3% of the APBN ceiling of Rp 724.3 trillion. The largest allocations amounted to Rp 193.7 trillion for teachers/lecturers/educators; the construction of 100 community schools with the realization of Rp 788.7 billion; and school revitalization worth Rp 9.6 trillion.
The infrastructure budget has absorbed IDR 142.1 trillion, or 35.32% of the budget ceiling of IDR 402.4 trillion.
The three largest allocations are the Housing Financing Liquidity Facility for 158,000 houses amounting to IDR 18.8 trillion; irrigation development totaling IDR 13.6 trillion, and regional road development amounting to IDR 10.2 trillion spread across 37 provinces. All three are priority infrastructure spending to support connectivity, food security, and energy security.
Meanwhile, the central government's priority programs have absorbed a budget of Rp 420.2 trillion or 45.5% of the Rp 923.8 trillion ceiling. Among them, Free Nutritious Meals absorbed Rp 13 trillion or 18.3% of the APBN ceiling of Rp 71 trillion with the number of recipients reaching 22.7 million students.
In addition to the MBG, the Free Health Check program in 32 hospitals has absorbed Rp 3 trillion or 32% of the APBN ceiling of Rp 9.3 trillion, and the construction of 165 Garuda Public Schools/Schools of Excellence has only absorbed 4.9% of the APBN ceiling of Rp 14.4 trillion.
In particular, Suahasil underlined not to look at state spending from central government spending, but also regional spending. As of the end of August 2025, the central government has sent IDR 571.5 trillion or 62.1% of the APBN ceiling. While transfers to the regions are higher than last year, regional spending is slower.
"We see that local government funds are still deposited in banks up to Rp 233.11 trillion. For this reason, we expect local governments to spend faster within the next three months. This needs to be encouraged to accelerate spending so that the APBD can stimulate the regional economy," Suahasil explained.
Not only giving instructions, the central government has moved the regional economy through the transmigration area program as new growth points, provided support for cooperatives and UMKM amounting to Rp 15.6 trillion, and arranged a 6% interest loan facility for the Merah Putih Village Cooperative with a ceiling of up to Rp 3 billion for a tenor of 6 years.
Stay safe
As time goes by, the suboptimal absorption of state spending is increasingly unlikely to be channeled until the end of the year. Bank Central Asia Chief Economist David Sumual said it was not surprising that absorption had not reached half the outlook in the last quarter of the year. The reason is, this is a pattern that according to him has been chronic for years.
"This is exacerbated by the slow progress of the government's flagship programs, such as MBG, Koperasi Merah Putih, and others. The way to optimize absorption can be by reallocating to the acceleration of social assistance spending and the expansion of demand stimulus in Package 8+4+5," David said when contacted by SUAR, Monday (22/9/2025).
Despite the slowdown, Head of the Economics Department of the Centre for Strategic and International Studies (CSIS) Indonesia Deni Friawan said the government still needs to be careful in optimizing state spending. He emphasized that although optimizing state spending is important for growth, the balance with state revenues should not be forgotten.
"If the government optimizes spending when revenue cannot be optimized, what happens is the enlargement of the deficit. Moreover, with less than 3 months-4 months, it will be very difficult to achieve the spending target up to 100% of what has been set," Deni explained to SUAR.
In a situation like this, Deni is concerned that the government will rush to accelerate the disbursement of this expenditure in large amounts, but not pay attention to its impact on the economy, such as spending on office stationery (ATK), holding seminars or activities in hotels, and so on.
Instead of asking the government to spend hastily, Deni suggested that the APBN efficiency spending be re-evaluated. Financing and expenditure items that were cut by the Ministry of Finance during the leadership of Sri Mulyani Indrawati were re-entered into the budget.
"If the government wants to be fast, the previously cut expenditure posts must be revoked so that they can be spent immediately. Efficiency and budget cuts made earlier this year must also be restored, or the cuts canceled," he said.
State budget deficit widens
For next year, the Ministry of Finance said, the state budget deficit will widen in 2026. The decision was made during a working meeting of the House of Representatives Budget Committee (Banggar) with the Ministry of Finance, Bappenas, and Bank Indonesia at the House of Representatives Building, Jakarta, Thursday (18/9/2025).
In a matter of hours, the budget deficit, which was originally pegged at IDR 638.8 trillion or 2.48 percent of gross domestic product (GDP), has now risen to IDR 689.1 trillion or equivalent to 2.68 percent of GDP. The additional Rp 50.3 trillion arose in line with the increased state spending target.
Chairman of Banggar DPR RI Said Abdullah said the increase in the deficit was an inevitable adjustment. "The percentage of deficit to GDP, which was originally 2.48 percent, is now adjusted to 2.68 percent, or there is an increase of 0.2 percentage points," he said.
Finance Minister Purbaya Yudhi Sadewa emphasized that the public does not need to worry about the widening deficit. According to him, the deficit position of 2.68 percent of GDP is still within the safe range of 2-3 percent.
"So there is no need to be afraid. We remain careful," said Purbaya in Senayan. He added that a slightly higher deficit is actually needed to maintain growth momentum. "That's okay, it's needed to later create (economic-read) growth," he continued.
The government hopes that with additional spending, regional development can be boosted, public services improved, and national strategic projects run faster. This optimism departs from the assumption that state spending has a multiplier effect on economic activity.
From the perspective of entrepreneurs, the Indonesian Employers Association (APINDO) assesses that the widening of the 2026 Draft State Budget deficit to a level of 2.68% of GDP cannot be seen solely as a number. The Chairperson of APINDO's Trade Division, Anne Patricia, emphasized the importance of understanding the design and policy direction underlying the decision. According to her, the 2026 State Budget must be able to balance three interests at once: maintaining fiscal sustainability, creating expansion space for productive sectors, and providing a social cushion amid global uncertainty.
"This is not just about choosing a full power or conservative attitude. The challenge is how to keep the economic engine hot, but not overheating," he told Suar through a written statement, Sunday (21/9).
Anne admits that the government cannot just play it safe, but it also cannot be too aggressive without direction. She emphasized that the realization of growth in 2026 needs to be kept above the 5% baseline in order to create new jobs and reduce unemployment. Therefore, the Draft State Budget should provide room for measurable acceleration, not just maintain the status quo.
For the business world, said Anne, the key is in execution. How quickly strategic projects can be implemented, how much incentives trigger private investment, and how real public spending produces a multiplier effect will determine fiscal credibility. "If it is only a high target without real implementation, the result will be nothing more than aspiration without transformation," she said.
In the midst of global uncertainty, Anne emphasized the need to bring about a crowding-in effect, namely encouraging private participation and investment instead of relying solely on state spending. "Every policy of the 2026 State Budget must be seen as an instrument to ensure that every rupiah really becomes a multiplier machine for the national economy," she said.
However, the widening deficit also means that the government must seek additional financing. The financing budget now rises from IDR 638.8 trillion to IDR 689.1 trillion. This means that fiscal space will increasingly depend on new debt and other financial instruments.
In line with entrepreneurs, economists warn that this should not be taken lightly. Yusuf Rendy Manilet, an economist from the Center of Reform on Economics (CORE), believes that next year's deficit financing will most likely still rely on the issuance of government securities (SBN).
"The challenge that needs to be watched out for is the potential increase in yields due to high global uncertainty. This could increase the burden of debt interest payments in the long run," Yusuf said.
He added that the strategy of buying back SBN with lower yields can be considered by the government when conditions allow, so that the interest risk does not further burden future generations.
In addition, Yusuf reminded that although next year's state revenue target is higher than the projected realization in 2025, the increase is relatively limited. With macro assumptions that are quite optimistic, failure to achieve them, for example if economic growth misses, has the potential to widen the deficit beyond the government's target.
"If the macro assumptions are too optimistic and not achieved, then the government's fiscal space could be narrower, and the widening of the deficit could exceed the initial projection," he explained.
