Indonesia’s 2026 State Budget to Follow 2025 Austerity Measures

Jakarta, xweb.biz.id – Indonesia’s Finance Minister, Sri Mulyani Indrawati, has confirmed that the 2026 state budget (APBN) will continue the stringent austerity measures introduced in 2025. The government is implementing significant spending cuts across ministries and agencies to maintain fiscal discipline while ensuring essential public services remain unaffected.

The 2025 state budget saw a reduction of Rp 306.69 trillion ($18.9 billion), comprising Rp 256.1 trillion in cuts to ministry and agency budgets and Rp 50.59 trillion in regional transfers. According to Sri Mulyani, this efficiency framework will serve as a foundation for future budgeting.

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“The results of the 2025 budget will be used as a reference for structuring the 2026 budget,” she stated in Jakarta on Friday.

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Prioritizing Public Services Amid Budget Cuts

While the 2026 budget discussions are still in their early stages, Sri Mulyani assured that the government remains committed to protecting public services and social spending.

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“Although discussions are still limited, public services remain a priority. The reductions will not affect social spending, particularly social assistance programs, which have been explicitly protected,” she emphasized.

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The Social Protection Program budget stands at Rp 78.42 trillion, covering initiatives such as the Family Hope Program (PKH) and Non-Cash Food Assistance (BPNT). The government has pledged to ensure that austerity measures do not compromise essential welfare programs.

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Comprehensive Review of Ministries and Agencies

The Ministry of Finance will conduct an extensive review of all ministries and government agencies to ensure compliance with efficiency measures while maintaining constitutional obligations.

“After gathering input from all ministries and agencies, we will refine the budget further to ensure that efficiency measures align with legal and constitutional requirements,” Sri Mulyani stated.

Government’s Commitment to Fiscal Discipline

The budget efficiency strategy aligns with Presidential Instruction No. 1 of 2025, which mandates cost-saving measures across government institutions. The directive seeks to optimize spending, redirecting funds toward productive investments that bolster economic growth and national development.

President Prabowo Subianto has reiterated that the APBN must focus on direct benefits for the public and economic resilience. To achieve this, the government has targeted reductions in ceremonial expenses, business trips, maintenance costs, and non-essential activities.

Strategic Budget Allocations for Key Sectors

Despite spending cuts, the government continues to prioritize key sectors in the 2025 budget, including:

• Education – Rp 724.3 trillion
• Social Protection – Rp 504.7 trillion
• Infrastructure – Rp 400.3 trillion
• Food Security – Rp 139.4 trillion
• Law, Defense, and Security – Rp 375.9 trillion

These allocations reflect the government’s commitment to economic transformation and sustainable growth, despite ongoing fiscal constraints.

Maintaining Budget Deficit Below Three Percent

To uphold economic stability, the Indonesian government aims to keep the budget deficit below three percent of GDP. This disciplined fiscal approach is crucial for maintaining financial stability and ensuring that the incoming administration has the resources necessary to execute its policy agenda effectively.

“Ensuring fiscal discipline is essential to maintain macroeconomic stability and support Indonesia’s long-term economic resilience,” Sri Mulyani noted.

Indonesia’s decision to extend austerity measures into the 2026 state budget underscores the government’s commitment to prudent financial management. By reducing non-essential spending and reallocating resources to critical sectors, the administration aims to strengthen economic stability and improve the well-being of its citizens. As budget discussions progress, maintaining a balance between efficiency and public service delivery will remain a key focus for policymakers.

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