Jakarta. State spending surged sharply in the first two months of 2026, raising concerns among economists about Indonesia’s fiscal trajectory as the government accelerates expenditures early in the year.

Data from the Finance Ministry showed that state spending reached Rp 493.8 trillion ($29.1 billion) as of February, marking a 41.9% year-on-year increase. The figure consisted of Rp 346.1 trillion in central government spending and Rp 147.7 trillion in transfers to regional governments.

Rahma Gafmi, a professor at Airlangga University, said the fiscal position suggests the government is taking a significant risk by accelerating spending early in the year, a strategy commonly known as front-loading.

“The February 2026 state budget indicates the government is taking a big risk by front-loading spending,” Rahma said on Sunday.

The impact has been a sharp rise in the fiscal deficit during the first two months of the year. In January 2026, the state budget recorded a deficit of Rp 54.6 trillion, equivalent to 0.21% of gross domestic product (GDP). By February, the deficit widened to Rp 135.7 trillion, or 0.53% of GDP, representing a 342.4% increase year-on-year.

Rahma said the level of concern over the deficit depends largely on the quality of government spending. She argued that current spending has limited multiplier effects on public welfare, citing the government’s Free Nutritious Meals (MBG) program as a major driver. “The spending has been used recklessly to finance the Free Nutritious Meals program,” she said.

Rahma added that the policy has also contributed to unusual price dynamics in essential goods. “It has triggered inflation in basic necessities while deflation occurs at the same time because people’s purchasing power has dropped sharply,” she said.

Typically, the early months of a fiscal year serve as a warming-up period for government spending. However, Rahma said the scale of this year’s increase indicates a faster acceleration of program implementation compared with previous years, including infrastructure projects and social assistance disbursement.

“If this surge continues without a corresponding acceleration in revenue in the next quarters, it would signal real fiscal pressure and should be worrying,” she said.

Rahma noted that 41.8% spending growth is unusually large, urging the public to scrutinize whether the funds are directed toward productive capital expenditure with strong economic multipliers or toward populist and routine spending with limited impact.

“Productive spending will ‘pay for itself’ through future economic growth, while consumptive spending will only burden the fiscal balance,” she said.

Meanwhile, state revenue grew only 12.8% year-on-year, creating a significant gap with the pace of spending growth. Rahma said the government appears to be front-loading expenditure to stimulate economic activity earlier in the year, while revenue typically rises later through corporate income tax (PPh) payments and dividends from state-owned enterprises.

“This imbalance is not unusual, but a gap that is too wide early in the year could narrow fiscal room toward the end of the year,” she said.

Rahma added that an expansionary fiscal strategy can create a positive shock to economic activity at the start of the year to help achieve annual growth targets. However, she warned that the policy may become problematic if it fails to stimulate investment and job creation.

“Instead of driving investment that creates employment, what we are seeing is a shift from the formal sector to the informal sector,” she said.

Rahma also pointed to rising layoffs and a trend of investors relocating to countries such as Vietnam.

“This means purchasing power is falling. When inflation occurs while purchasing power drops, people will start protesting because their basic needs are no longer met,” she said.

If the current deficit trajectory continues linearly, Rahma warned that Indonesia’s annual deficit target could come under pressure. The government may have to increase financing through the issuance of government bonds or external borrowing.

“With global interest rates likely to remain volatile, this could raise debt servicing costs in the future,” she said.

“Our state budget will become increasingly burdened going forward. Under such conditions, achieving Indonesia’s Golden Vision 2045 will be difficult,” Rahma concluded.

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