Jakarta. Indonesia has budgeted Rp 650.3 trillion ($36.39 billion) for debt interest payments in 2027, an 11.7% increase from the government’s 2026 outlook of Rp 582.2 trillion as financing costs continue to put pressure on the state budget.

“In the 2027 state budget proposal, debt interest payments are allocated at Rp 650.3 trillion, up 11.7% from the 2026 outlook,” according to the 2027 state budget proposal (RAPBN).

Of the total, Rp 589.6 trillion is earmarked for domestic debt interest payments, while Rp 60.63 trillion will cover interest on external debt. The increase is slower than the 13.2% growth recorded in the 2026 outlook.

Debt interest payments cover coupons on government securities, interest on loans, and other costs related to debt management. The government said timely and accurate payments are essential to maintaining the credibility and accountability of its debt management.

The size of the interest burden is influenced by several factors, including movements in the rupiah against foreign currencies, interest rates, market sentiment toward government securities, financing needs, and global and domestic economic conditions.

The government said it will balance borrowing costs against financing risks when formulating its debt strategy to prevent the debt burden from putting excessive pressure on the fiscal position in the short and long term.

It will continue to apply prudent liability management by actively managing its debt portfolio, including its maturity profile and instrument mix, while mitigating interest rate, foreign exchange and refinancing risks.

To contain borrowing costs, the government plans to optimize its debt portfolio and adopt measured strategies for new borrowing, including flexible issuance aligned with market conditions to secure efficient financing costs while keeping risks under control.

The government also aims to reduce the impact of exchange-rate fluctuations on debt interest payments by strengthening domestic debt financing. This will include deepening the domestic financial market, broadening the domestic investor base and diversifying its debt instruments.

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