Indonesia's Unaudited Budget Reveals IDR 45.4T Excess Cash

Indonesia's unaudited budget deficit for 2024 came in lower than the government's earlier estimate, according to official data released on Monday. The deficit was recorded at 507.8 trillion rupiah ($31.38 billion), equivalent to 2.29% of GDP, below the projected 2.7% but higher than 2023's 1.61%. This outcome provides fiscal room for 2025 after the government canceled a planned value-added tax (VAT) hike. Under Indonesian law, the annual fiscal deficit must remain below 3% of GDP. The finance ministry noted that the smaller deficit, coupled with higher debt issuance in 2024, resulted in 45.4 trillion rupiah in excess cash, which will help cover the projected 2025 budget shortfall of 2.53% of GDP.

Finance Minister Sri Mulyani Indrawati highlighted that the surplus would strengthen fiscal stability under the new administration led by President Prabowo Subianto, who took office in October 2024.

Government revenues increased by 2.1% year-on-year to 2,842.5 trillion rupiah in 2024, while total spending rose 7.3% to 3,350.3 trillion rupiah. For 2025, expenditure is projected to grow further, reaching 3,621.3 trillion rupiah. However, the cancellation of a general VAT increase—limited instead to luxury goods—has narrowed potential revenue gains. The ministry had estimated a broader VAT hike would generate an additional 75 trillion rupiah, while the restricted luxury goods tax is expected to yield just 1.5 trillion to 3.5 trillion rupiah.

President Prabowo’s administration has adopted a bold fiscal stance, prioritizing flagship programs such as the "Free Nutritious Meals" initiative, which launched Monday with a budget of 71 trillion rupiah. Other plans include expanding farmland, requiring increased debt to fund these initiatives. Economic growth in 2024 was estimated at approximately 5%, slightly below 2023's 5.05%. For 2025, the government has set a target of 5.2% growth.

Fiscal and economic policies will remain under close scrutiny by financial markets, particularly given Prabowo's ambitions to balance growth-driving investments with fiscal discipline.