Jakarta. Indonesia's Finance Minister Sri Mulyani Indrawati said the country’s fiscal deficit for 2025 is now expected to widen to 2.78 percent of GDP, up from the earlier projection of 2.53 percent, due to a sharp decline in state revenue during the first half of the year.

Speaking after a meeting with President Prabowo Subianto on Tuesday afternoon, Sri Mulyani said the revised projection follows a 9 percent drop in government revenue in H1 2025.

“We reported the latest deficit projection affected by the decline in state revenue to the president and discussed the government’s response,” Sri Mulyani said at the State Palace in Jakarta.

According to data from the Ministry of Finance, Indonesia posted a budget deficit of Rp 204.24 trillion ($12.5 billion) in the first half of 2025, or 0.84 percent of GDP. State revenue during the period fell to Rp 1,201.7 trillion, compared to Rp 1,320.7 trillion in the same period last year.

In response, President Prabowo has called for the acceleration of deregulation efforts to boost investment and economic activity and reduce the strain on the national budget.

“The president emphasized the need for deregulation so that the economy can grow without relying too heavily on state spending,” Sri Mulyani said. “Existing regulations should facilitate business, investment, and trade.”

Despite the fiscal shortfall, Prabowo has directed the government to maintain focus on key priority programs, including free nutritious meals, free school construction, expansion of cooperative enterprises, universal health screenings, school renovations, and agricultural infrastructure development.

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