Jakarta. Indonesia’s government raised Rp 744 trillion ($44.5 billion) in budget financing in 2025, exceeding the state budget target by 20%, the Financial System Stability Committee (KSSK) said.

Most of the funds came from debt issuance, supplemented by surplus cash balances, and were used to cover the fiscal deficit, invest in infrastructure, and fund social programs such as education, health, and food assistance.

The financing comprised Rp 736.3 trillion in debt financing, equivalent to 94.9% of the APBN target, and Rp 7.7 trillion in non-debt financing, or minus 4.9% of the target. Debt financing came in lower than initially planned, partly due to the use of Rp 85.6 trillion in excess budget balance (SAL).

KSSK said budget financing was used to cover the fiscal deficit, fund government investments, and support efficient cash management. “Debt financing through the issuance of government securities (SBN) and loans was carried out prudently and in a measured manner to minimize costs and control risks,” KSSK said in a statement published on Bank Indonesia’s website on Wednesday.

As part of its cash management strategy, the government placed Rp 200 trillion in Himbara banks on Sept. 12, 2025, followed by Rp 76 trillion on Nov. 12, 2025, which KSSK said was aimed at ensuring efficient and optimal cash management.

Based on KSSK’s assessment, fiscal, monetary, and financial sector conditions remained stable in the fourth quarter of 2025, supported by strong policy coordination and synergy among authorities. Entering January 2026, global financial market volatility briefly increased, driven mainly by trade tensions and geopolitical risks.

KSSK, which consists of the finance minister, the Bank Indonesia governor, the chairman of the Financial Services Authority (OJK), and the chairman of the Indonesia Deposit Insurance Corporation (LPS), said it would continue to closely monitor developments and conduct forward-looking assessments of the economy and financial sector amid global uncertainty. “Mitigation efforts are also carried out in a coordinated manner, both among KSSK member institutions and with other ministries and agencies,” the committee said following its first regular meeting of 2026.

On the spending side, state expenditure was directed toward supporting national development programs, including the Free Nutritious Meals (MBG) program, financing for the Red-and-White Village/Subdistrict Cooperative (KDKMP), and four stimulus packages rolled out throughout 2025 to safeguard purchasing power, support businesses, boost domestic consumption, and sustain economic growth.

To strengthen economic activity and protect household purchasing power, the government allocated Rp 805.4 trillion for expenditures with direct public benefits. These included social assistance programs such as the Family Hope Program (PKH), education aid under PIP and KIP Kuliah, food assistance cards (BPNT), cash transfers for social welfare, health insurance contribution assistance (PBI JKN), salaries and allowances for non-civil servant teachers, and housing support.

Additional allocations were directed toward public services such as MBG, free health checkups, community schools, and Garuda flagship schools. The government also continued subsidies and compensation to stabilize prices and support production, including non-energy subsidies such as subsidized microcredit (KUR) and fertilizer, energy subsidies, land optimization and rice field expansion programs, as well as support for Bulog and national food reserves.

Spending was also focused on public infrastructure and productivity, covering school renovations, dam and irrigation projects, water resource maintenance, road and bridge preservation, fishermen villages, the national salt program, and saline tilapia aquaculture development.

Four stimulus programs introduced in 2025 and extended into 2026 include the extension of the 0.5% final income tax for MSMEs through 2029, continued government-borne Article 21 income tax incentives (PPh 21 DTP) for tourism workers and labor-intensive industries, as well as discounts on work accident (JKK) and death benefit (JKM) contributions for all non-wage earners.

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