JAKARTA: Finance Minister Suahasil Nazara says the state budget remained on track through August as spending accelerated alongside state revenue growth while the budget deficit remained under control.
“Until the end of August, state budget performance remained strong, with a positive primary balance and the deficit remaining within controlled limits,” Suahasil said at the state budget press conference.
As of Aug 31, state spending reached around 2.3 quadrillion rupiah, or 59.7% of the 3.8 quadrillion rupiah allocated for 2026.
Spending grew 17.1% year-on-year (y-o-y), with spending by ministries and government institutions rising 33% to 912.4 trillion rupiah.
State revenue reached 2.1 quadrillion rupiah, equivalent to 65% of the annual target.
Revenue grew 25.4% y-o-y, supported by a 24.1% increase in tax revenue and a 41.7% rise in non-tax revenue to 435.1 trillion rupiah.
Revenue performance in the past month helped keep the budget deficit at 240.1 trillion rupiah, or 0.93% of gross domestic product (GDP), and the primary balance positive.
According to the government’s latest projection, the full-year deficit in 2026 is expected to hit a higher rate of 2.85% of GDP, which would still be a slight improvement over the 2.92% recorded in 2025, a hairbreadth from the 3% legal cap enforced following the 1997-1998 Asian financial crisis.
Suahasil said the government would continue to make efforts to sustain economic growth with maintaining fiscal credibility.
“The state budget is here to protect the public. The various programmes I mentioned earlier – energy subsidies, the Family Hope ProgramME, social protection, safeguarding purchasing power and welfare and promoting economic empowerment – all serve that purpose.
“That is why the state budget must remain credible,” he said.
Suahasil has made it a point to focus on fiscal continuity after taking over as finance minister last Monday to replace Purbaya Yudhi Sadewa.
He is the third finance minister in less than two years as President Prabowo Subianto’s administration seeks to reassure investors amid market concerns over fiscal discipline.
Yusuf Rendy Manilet, an economist at the Centre of Reform on Economics, said the acceleration in government spending was important to support economic activity, particularly the 33% rise in annual spending among ministries and government institutions.
“The 67.5% increase in goods spending is also important because it enters economic activity relatively quickly,” Yusuf said last Friday.
He said the government still had room to accelerate spending in the fourth quarter, provided it remained aligned with state revenue and fiscal capacity.
The government should focus spending on programmes ready for implementation and capable of supporting economic activity rather than rushing to meet year-end budget targets.
“What needs to be avoided is a buildup of spending at the end of the year as a result of chasing the absorption figure,” Yusuf said.
Targeted spending could support growth through government consumption and domestic demand, he continued, although the impact would depend on the quality and speed of disbursements to households, businesses, projects and domestic supply chains. — The Jakarta Post/ANN
