Budget pressure building
A bloated budget where expenditure growth outpaces revenue growth is typically the hallmark of a crisis. Yet, the official narrative remains sanguine.
The Indonesian government faces mounting fiscal pressure as the year draws to a close, despite a surge in revenue. Revenue growth outpaced expectations by more than 24 percent year-on-year nine months into 2026. However, higher-than-planned expenditure on subsidies casts a shadow over the budget plan's optimistic outlook. The structural imbalance, with expenditure outpacing revenue, signals an impending crisis, yet the official narrative remains optimistic.
The Finance Ministry maintains a positive front as the Middle East conflict drives global oil prices to near record highs, with Brent crude trading at US$113 per barrel. This price spike is nearly double the original budget assumption of $70 per barrel. The discrepancy poses a significant challenge for the government, which has pledged not to raise pump prices for subsidized gasoline and diesel.
Meanwhile, demand for these subsidized fuels has surged as consumers opt for cost-effective alternatives. Coordinating Economy Minister Airlangga Hartarto recently announced that the traditional year-end travel incentives will be extended for another three months to stimulate economic growth. The minister expressed concern over the current economic growth rate, which is robust but insufficient to sustain the government's ambitious 8 percent growth target.
The government continues to seek ways to manage the budgetary strain while ensuring the affordability of subsidized fuels for consumers.
Written by urgent.news from The Jakarta Post's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
Also reported by 1 other outlet
- Budget pressure building thejakartapost.com
