Amid Large Funding Needs, Where Is Government Debt Heading?
The government appears increasingly aggressive in raising debt through the issuance of government securities throughout 2026, both via conventional and Sharia-compliant instruments. This move comes amid large spending needs. As is known, state expenditure realisation up to 31 May 2026 reached Rp1,365.4 trillion (35.5% of the state budget target). This figure grew significantly by 34.4% compared to the same period last year.
According to data from the Directorate General of Financing and Risk Management (DJPPR), based on the results of Government Securities (SUN) auctions throughout 2026 up to 9 June 2026, the government has raised approximately Rp401.6 trillion. This amount is equivalent to about 54.9% of the total incoming bids of Rp731.45 trillion. This portion is quite large when compared to the previous year. In the same period up to early June 2025, total incoming bids in SUN auctions reached Rp728.59 trillion, while the amount won by the government was only Rp282.20 trillion. This means the ratio of bids taken by the government last year was only around 38.7%. Looking at the full year 2025, the SUN absorption ratio was only about 31.5%. This shows the government is far more aggressive in taking funds from the market through debt auctions.
Looking deeper, the largest ratio in 2026 occurred at the 31 March 2026 auction. At that time, total incoming bids in the SUN auction reached Rp58.22 trillion, while the amount won by the government was Rp40 trillion, meaning the absorption ratio reached 68.7%. Observing the trend, since the February auction, the ratio of bids taken by the government has frequently been above 50%. This trend continued until the last SUN auction on 9 June 2026, when the government took Rp26.35 trillion from total bids of Rp46.69 trillion, equivalent to 56.4%.
The increase in the portion of SUN taken by the government occurred alongside a rise in the winning FR yields. The FR yield for the 5-year tenor, for example, rose from 5.435% at the 6 January 2026 auction to 6.669% on 26 May 2026. Meanwhile, the FR yield for the 10-year tenor rose from 6.079% to 6.699% over the same period. This situation indicates that the government is not only taking a larger portion of debt but also at an increasingly expensive cost, as the yields that must be paid to investors are rising.
Large absorption is also evident in Sharia government securities, or SBSN. Throughout 2026 up to 2 June 2026, total incoming bids in SBSN auctions reached Rp334.45 trillion. From this total, the government took Rp133.85 trillion, resulting in an SBSN absorption ratio of around 40%. While this figure is not as high as SUN, compared to the average throughout 2025, this year’s SBSN absorption portion still appears larger. For comparison, throughout 2025 total incoming bids in SBSN auctions reached Rp817.66 trillion, from which the government won Rp237.9 trillion, meaning the absorption ratio last year was only around 29.1%. Compared to the early period of 2025, the difference is not too far. Up to 27 May 2025, total SBSN bids reached Rp227.33 trillion, while the government won Rp96 trillion, a ratio of about 42.2%. However, what is interesting is the trend in several recent auctions in 2026. On several occasions, the government took a fairly large portion of the total incoming SBSN bids. The highest ratio occurred at the 19 May 2026 SBSN auction, when total incoming bids reached Rp18.8 trillion and the government took Rp12 trillion, resulting in an absorption ratio of 63.8%. This rarely happened compared to previous years. A high ratio also occurred at the 24 February 2026 auction, when the government took Rp20 trillion from total bids of Rp35.62 trillion, or 56.2%. Then on 5 May 2026, the government again absorbed Rp12 trillion from total bids of Rp21.19 trillion, a ratio of 56.6%.