The Indonesia Strategic and Economic Action Institution (ISEAI)\nassesses that this year\u2019s fiscal condition has entered a critical and\nhighly determining phase, where ambitions for high growth directly\nconfront the reality of debt burdens reaching their peak in the modern\nhistory of the Republic.<\/p>\n
Senior analyst at ISEAI, Ronny P. Sasmita, explains that the primary\nindicator often used by the Indonesian Government to reassure markets is\nthe government debt-to-GDP ratio, projected to be in the range of 41.3\nto 41.5 percent in 2026.<\/p>\n
\u201cAlthough this figure is technically still below the legal limit of\n60 percent set by the State Finance Law, a more critical analysis\nreveals a persistent and concerning upward trend,\u201d said Ronny in the\nISEAI Working Paper, quoted on Monday, 20 April 2026.<\/p>\n
At the end of 2024, he said, the debt ratio was still at 39.2\npercent, meaning an escalation of more than 200 basis points in less\nthan two years. This increase is not merely cyclical fluctuation but a\nreflection of a structural shift in spending policies that is beginning\nto exceed the sustainable capacity of state revenue collection.<\/p>\n
Ronny notes that the total nominal central government debt at the end\nof 2025 was recorded at Rp 9,637.9 trillion, with a tendency to continue\nclimbing towards the psychological figure of Rp 10,000 trillion by\nmid-2026. The dominance of domestic instruments in the form of\nrupiah-denominated Government Securities (SBN) provides partial\nprotection against exchange rate risks.<\/p>\n
However, on the other hand, this creates a deep dependence on\ndomestic banking liquidity. When the government absorbs massive\nliquidity to finance a widening deficit of up to 2.9 percent of GDP, the\nrisk of crowding out the private sector becomes a real threat to\nnational productivity.<\/p>\n
In his analysis, it is explained that the government debt ratio is\nestimated to rise slightly from 41.0 percent of GDP in 2025 to 41.3\npercent in 2026. The budget deficit will also widen from 2.8 percent to\n2.9 percent of GDP. On the other hand, real GDP growth is projected to\nstrengthen from 5.0 percent to 5.1 percent, while inflation, measured by\nthe Consumer Price Index, will increase from 2.8 percent to 3.0\npercent.<\/p>\n
Meanwhile, the foreign debt-to-GDP ratio is estimated to decline\nslightly from 29.9 percent in 2025 to 29.7 percent in 2026. Foreign\nexchange reserves will shrink from US$156.5 billion to US$154.6 billion.\nThe primary balance remains in negative territory and worsens from minus\n0.5 percent of GDP to minus 0.6 percent.<\/p>\n
From this data, according to Ronny, although economic growth is\npredicted to strengthen slightly to 5.1 percent in 2026, the budget\ndeficit is widening, which automatically pushes the debt ratio to a\nhigher level. This phenomenon indicates that the economic growth\noccurring is debt-driven rather than driven by increased productivity or\nindependent private investment.<\/p>\n
In addition, the decline in foreign exchange reserves in early 2026\nis an early indication that interventions to maintain Rupiah exchange\nrate stability are beginning to erode Indonesia\u2019s external buffers amid\nrising foreign debt payments.<\/p>\n
He explains that Indonesia\u2019s debt structure in 2026 faces challenges\nfrom the currency composition perspective. Although the majority of debt\nis in Rupiah, the portion of foreign currency debt remains significant\nand highly sensitive to exchange rate fluctuations. When the Rupiah\nexchange rate depreciates, breaking through the 17,000 per US dollar\nlevel in April 2026, the principal and interest burden of foreign debt\nswells immediately, creating additional pressure on APBN liquidity.<\/p>\n
This condition is exacerbated by dependence on foreign investors in\nthe SBN market, whose share has declined but still has the potential to\ntrigger asset price volatility if global sentiment shocks occur.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/iseai-this-years-fiscal-condition-enters-critical-phase-1776667852", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }