JAKARTA: President Prabowo Subianto has instructed state asset fund Danantara to redirect a sum of the dividends from state-owned enterprises (SOEs) back to the state budget to help alleviate the burden of state debt.
Finance Minister Purbaya Yudhi Sadewa told reporters on Wednesday that the President had “an idea to place a sum of Danantara profits for government reserves, which can help reduce our debt”.
He said the policy would come into effect this year but specified neither when nor how much dividend was involved; “We’ll await the President’s direction”.
Before Danantara was established last year, SOEs remitted a portion of their dividends to the state in proportion to the government’s shares in respective companies, which in 2024 reached a total of Rp 86.4 trillion (US$4.83 billion).
The arrangement changed with Danantara’s establishment last year, the dividends go directly into the fund who in turn manages the money for expansion and reinvestment.
Before the change, the dividends were logged as nontax revenue and asked whether that would be the case again now, Purbaya said it was still being discussed.
It was unclear whether it would become a permanent setup.
“We want to increase the efficiency of our revenue, and we want our budget to be more sustainable moving forward. We’ll make use of every avenue, including income from Danantara,” said Purbaya, who went on to say that this would help the government in pressing down the fiscal deficit.
Lowering the deficit and turning tax collection “more effective” was the government’s strategy in dealing with mounting state debts, said the minister.
Read also: Budget scrapes through 2025 with deficit just below legal cap
The Finance Ministry’s Financing and Risk Management Directorate General unveiled on Tuesday that the government’s debt had reached a total of Rp 10.3 quadrillion or 41.26 percent of gross domestic product as of June 30.
The debt was the country’s highest ever and had gone up by Rp 1.8 quadrillion since Prabowo took office in October 2024, from Rp 8.5 quadrillion or 38.5 percent of GDP as per that year’s third quarter.
Purbaya noted that 2026 has not ended yet and said the debt “could go down a little bit”.
Moreover, he pointed out that the current standing was still far off the 60 percent legal cap.
Indonesia was swept with a crippling monetary crisis in 1997 and 1998 that ended up with big protests that ultimately toppled the Suharto dictatorship after 32 years in power.
A few years after the regime ended, a law that limits the debt to 60 percent of GDP and maximum fiscal deficit of 3 percent GDP was put in place and Indonesia had been consistently meeting those caps a few years after they were enforced.
Read also: 2027 budget plan puts prudence, credibility to the test
Prabowo in 2024 tested the boundaries by saying that reaching 50 percent debt-to-GDP ratio was “okay” and that the 3 percent deficit cap was “arbitrary”, the main idea being Indonesia has unused space to push for more aggressive growth.
The market did not pay a great deal of attention at first but ended up not taking the aggressiveness well this year after 2025 concluded with the deficit being dangerously close to the cap.
The government eventually changed its stance and resorted to more conservative fiscal management. - Jakarta Post/ANN
