Central Government Spending Reaches $100 Billion, Up 29%

Central Government Spending Reaches $100 Billion, Up 29%

Jakarta. Central government spending reached Rp 1.79 quadrillion ($100.6 billion) in the first eight months of 2026, up 29% from a year earlier, as expenditures accelerated across government programs and energy subsidies and compensation increased.

The Finance Ministry said spending by ministries and government agencies reached Rp 912.4 trillion as of Aug. 31, while non-ministerial spending totaled Rp 879.1 trillion.

Ministry and agency spending included Rp 259 trillion in personnel expenditure, Rp 389 trillion in goods and services, Rp 159.8 trillion in capital expenditure and Rp 104.5 trillion in social assistance.

Non-ministerial expenditure included pension payments, subsidies and government compensation associated with regulated fuel and electricity prices.

Subsidy and compensation payments reached Rp 331.4 trillion through August, with the government now making monthly payments to state electricity company PLN and energy company Pertamina.

That represented a substantial increase from Rp 218 trillion during the same period of 2025, comprising Rp 149 trillion in subsidies and Rp 68.6 trillion in compensation.

“Compensation payments are now made monthly, and subsidies are also paid monthly to PLN and Pertamina,” Finance Minister Suahasil Nazara said Friday.

“This is intended to give PLN and Pertamina greater cash-flow flexibility so they can continue supplying goods whose prices are regulated by the government, including subsidized products,” he added.

The Rp 331.4 trillion in subsidy and compensation spending through August was about 52% higher than the Rp 218 trillion recorded a year earlier.

Energy subsidy and compensation spending is sensitive to movements in crude oil prices and the rupiah exchange rate, as well as consumption volumes for subsidized fuel, liquefied petroleum gas and electricity.

Higher oil prices resulting from global geopolitical tensions can therefore increase the government’s energy subsidy burden, particularly when combined with a weaker rupiah.

Indonesia faced similar pressures in 2022 after Russia’s invasion of Ukraine, when surging global energy prices sharply raised the cost of maintaining regulated domestic fuel and electricity prices.

Non-energy subsidy spending, meanwhile, has been affected primarily by higher fertilizer subsidy payments.

Suahasil said the government would continue using subsidies and compensation to maintain supplies of goods sold at regulated prices and support broader economic activity.