Indonesia’s 2025 fiscal deficit target revised upwards to 2.78% of GDP, minister says

[JAKARTA] Indonesia has revised its fiscal deficit outlook for 2025 to 2.78 per cent of GDP, up from 2.53 per cent, the finance minister said on Tuesday (Jul 1), citing the need to finance key government programmes aimed at addressing the impact of a volatile global market.

The 2.78 per cent figure would represent the highest fiscal deficit for Indonesia since 2021, when the country was dealing with the fallout from the global pandemic. The legal limit set by Indonesia for fiscal deficits is 3 per cent.

Addressing a parliamentary hearing, Finance Minister Sri Mulyani Indrawati said Indonesia ran a budget deficit of 197 trillion rupiah (S$15.5 billion) in the first six months of 2025, equivalent to 0.81 per cent of GDP.

Earlier in the same address she had placed the budget deficit figure at 204.2 trillion rupiah in the first six months, equivalent to 0.84 per cent of GDP. She later said updated data meant the figure could be revised to 0.81 per cent.

A presentation during the minister’s talk showed that total revenues for the half year from January to June stood at 1,210.1 trillion rupiah, while spending over the same period reached 1,407.1 trillion rupiah.

Sri Mulyani also said the government was revising downwards the state revenue target for 2025 to 2,865.5 trillion rupiah, 95.4 per cent of the initial target set for the year.

The minister said the government may use excess cash accumulated from previous years to fund a higher deficit, which could reduce the need to issue more debt in the second half of 2025.

In an earlier briefing to parliamentarians, Sri Mulyani said the government will focus next year on making sure the domestic economy is strong enough to mitigate risks arising from global economic uncertainties, in response to lawmakers’ comments on the country’s 2026 economic plans.

Fiscal policies next year will also focus on improving revenue collection, maintaining a favourable investment climate, and managing prudent and sustainable debt financing, she said. REUTERS