Indonesia's 2026 Budget Deficit Outlook Seen at 2.85% of GDP, House Panel Says

STATE BUDGET - JAKARTA. Indonesia's budget deficit is expected to widen to 2.85% of GDP this year, bigger than originally predicted, a senior lawmaker said on Tuesday, even as the government aims to scale back spending on the president's flagship school meals programme.

 

The new estimate, which is close to the legislated deficit ceiling of 3% of GDP, was released by Said Abdullah, the head of parliament's budget commission, at the start of a hearing with the finance ministry.

 

It is wider than both the government's previous estimate of a deficit of 2.68% this year and the 2025 budget gap of 2.81% of GDP.

 

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Finance Minister Purbaya Yudhi Sadewa told the hearing that the budget deficit in the first half of 2026 was 196.5 trillion rupiah ($10.9 billion), equivalent to 0.76% of GDP.

 

Indonesia's government typically spends more towards the end of a fiscal year because payments for some programmes are authorised after audits.

 

The budget has faced pressure this year from â??higher energy subsidy costs and capital outflows amid global "risk-off" sentiment, including concerns over huge spending on the free meals programme, with Jakarta looking at cutting spending on it by up to around 40 trillion rupiah after identifying inefficiencies.