Calming the Turmoil: The Government's Strategy to Keep the State Budget Healthy

Jakarta, CNBC Indonesia - Acting Director General for Stability and Development of the Financial Sector, Herman Saheruddin, outlined the government’s strategy to keep economic growth strong amid global economic turbulence. One pillar is maintaining a healthy State Budget (APBN) with a deficit that is controlled.

‘The commitment at the Ministry of Finance is to ensure the APBN can act as a shock absorber so that Indonesians, from the consumption perspective, can continue to carry out their activities well,’ he said at the SMBC Indonesia Economic Forum 2026 on Tuesday, 19 May 2026.

As of Q1-2026, Indonesia’s economy grew by 5.61%. This growth is the highest among G20 countries. He said the growth is strongly supported by domestic household consumption, which rose 5.52% with a contribution of up to 54.4%.

Other pillars include investment, up 5.96%, and government consumption, up 21.8% with a contribution of 6.7%.

‘So these three main factors are, first, domestic household consumption; second, domestic investment; and third, government consumption. All are domestic factors with a population of over 200 million indicating the enormous potential of domestic demand if directed correctly,’ he explained.

He further stated that through the fiscal function in the APBN, the Government is now more disciplined in implementing the budget on time. In other words, the Government is prudent with expenditures and timely.

This step is crucial because it is believed to create a multiplier effect for both consumption and investment.

‘In the corporate world budgets are usually spent in Q3 and Q4; for us, the Government with the APBN as a fiscal tool delays consumption, which means delaying the multiplier effect. Therefore one of the strategies we implement is to do this. If you look at several sectors with strong growth, including trade, agriculture, as well as information and communications, food and beverages, and the processing and trade sectors, which together account for more than 10% of GDP growth, this is what we call spending with impact, because good government spending is disciplined, impactful, and timely,’ he explained.