remainder

Indonesia Plans Rp 2.12 Trillion Spending Surge to Boost Economic Growth

Jakarta, August 6, 2025 – The Indonesian government is preparing to inject Rp 2.121 trillion (approximately $131.4 billion USD, based on a current exchange rate of Rp 16,150 per USD) into the national economy over the next six months, aiming to accelerate growth, Finance Minister Sri Mulyani Indrawati announced today. The funds, remaining from the 2025 State Budget (APBN), will be strategically deployed through programs like subsidized lending and direct economic stimulus.

This announcement comes amidst a revised forecast for the 2025 state budget deficit, now projected to reach Rp 662 trillion (approximately $40.9 billion USD) or 2.78% of Gross Domestic Product (GDP). This is a slight increase from the initial target of 2.53%, attributed to contractions in tax revenue during the first half of the year.As of the first semester of 2025, the deficit stood at 0.84% of GDP, equivalent to Rp 204.2 trillion.

Key Spending Initiatives:

People’s Business Credit (KUR) Distribution: Rp 287.8 trillion (approximately $17.8 billion USD) is earmarked for distribution through the KUR program,designed to provide affordable financing to micro,small,and medium-sized enterprises (MSMEs). This program is a cornerstone of the government’s efforts to foster inclusive economic growth.
Third Quarter Economic Stimulus: A further Rp 10.8 trillion (approximately $668.7 million USD) has been allocated for various economic stimulus programs slated for implementation in the third quarter of 2025, specifically targeting July and August. Details on the specific sectors benefiting from this stimulus were not instantly available.
* Revenue & Expenditure adjustments: The government now anticipates state revenue of Rp 2,865.5 trillion (approximately $177.4 billion USD), falling short of the initial target of Rp 3,005.1 trillion. State expenditure is projected at Rp 3,527.5 trillion (approximately $218.3 billion USD),a reduction from the previously estimated Rp 3,621.3 trillion.

Focus on Governance and Clarity

Minister Indrawati emphasized that the effectiveness of this substantial spending will hinge on good governance and the prevention of corruption. “The quality of spending must remain good, governance becomes good and there is no corruption so that the figure of Rp 2,121 trillion can really be felt by the community,” she stated during a press conference at the Coordinating Ministry for the Economy. This underscores the government’s commitment to ensuring that funds reach their intended beneficiaries and contribute to tangible economic improvements.

Context & Long-Term Implications:

Indonesia, Southeast Asia’s largest economy, has been navigating a complex global economic landscape marked by fluctuating commodity prices and geopolitical uncertainties. The government’s proactive fiscal measures are aimed at bolstering domestic demand and mitigating the impact of external headwinds. The focus on MSMEs through the KUR program is especially meaningful, as these businesses are vital engines of job creation and economic diversification.

The widening budget deficit, while manageable according to Minister Indrawati, warrants continued monitoring. Sustained economic growth will be crucial to improving tax revenue and bringing the deficit back within target range. The success of these initiatives will be closely watched by investors and international financial institutions, including the World Bank and the International Monetary fund, who have been providing technical assistance and financial support to Indonesia’s economic growth programs.

note: Exchange rates used are approximate as of August 6, 2025, and are subject to change. Further details regarding the specific economic stimulus programs planned for the third quarter are expected to be released by the Coordinating Ministry for the Economy in the coming weeks.