Deputy Finance Minister: Accelerating government spending to boost growth

Jakarta (ANTARA) - Deputy Finance Minister (Wamenkeu) Juda Agung stated that the high government spending in the first quarter of 2026 is indeed designed to boost economic growth from the beginning of the year. Government spending in the first quarter of 2026 grew by 21.8 per cent year-on-year (yoy), with a budget deficit reaching 0.93 per cent of Gross Domestic Product (GDP) or Rp240.1 trillion. “This is what has been highlighted a lot—the deficit in one quarter already at 0.93 per cent. Because this is by design, the government wants economic growth not at the end of the year, spending not in quarter IV, but spending starting in quarter I, so that the impact will be even throughout the year, in I, II, III, and IV,” he said during the Rakorbangpus (Central Development Coordination Meeting) 2026 in the Context of Preparing the RKP (Government Work Plan) for 2027 in Jakarta on Thursday. Amid geopolitical uncertainties due to military conflicts in West Asia involving the US, Juda praised Indonesia’s economic growth achievement of 5.61 per cent, driven by various government policies. Compared to other countries such as Malaysia, China, Singapore, South Korea, and the US, Indonesia’s economic growth in the first quarter of 2026 is higher, surpassed only by Vietnam. However, he emphasised that Indonesia’s fundamentals are better than Vietnam’s, reflected in Vietnam’s foreign exchange reserves below 3 months of imports, while Indonesia’s approach 6 months. Another positive note is the 2.42 per cent inflation rate, suspected to be the lowest and stable in recent years. This indicates that Indonesia’s economic growth is high, with maintained stability. Likewise, Indonesia’s budget deficit can be kept below 3 per cent, and debt to GDP remains at 40 per cent. “This is what we need to maintain together, how we can grow high, but on the other hand, economic stability in both the short and long term can still be maintained well,” said the Deputy Finance Minister. Furthermore, debt financing is still well managed, currently reaching 35.1 per cent of the state budget or Rp256.7 trillion from the beginning of the year to 31 March 2026. Debt financing fulfilment is on track through anticipatory measures and active cash and debt management to ensure adequate government cash availability and a strong remaining budget balance (SAL). Additionally, the performance of the Government Securities (SBN) market remains good, even though the yield on US 10-year bonds temporarily rose but then stabilised again. “If the yield can still be maintained like this, what does it mean? It means that both domestic and global investors still trust our fiscal condition. If the fiscal condition were poor, it would certainly rise sharply as during the crises in 2008, 2018, and so on. But now it can be maintained well,” he said. Compared to countries like the Philippines, India, South Africa, Mexico, and Brazil, the US 10-year bond yield spread is relatively low at 237 basis points (bps) as of 4 May 2026 year-to-date (YTD). “We can still maintain the spread, and this shows that confidence in our fiscal position is still quite strong,” stated Juda Agung.