Deputy Finance Minister Ensures Indonesia's State Budget Is Resilient Against Global Turmoil
Jakarta, CNBC Indonesia - Deputy Finance Minister Juda Agung stated that Indonesia’s state budget (APBN) structure is designed to be resilient in facing global volatility, including geopolitics that could push oil prices higher and pressure financial markets.
He made the remarks at the Indonesia Economic Forum 2026, held in Jakarta, on Monday, 2 March 2025. According to him, the APBN is designed with three core principles: prudent, disciplined, and flexible.
“Our APBN is designed firstly on prudent principles. Then discipline. Third, flexibility. Prudent and disciplined, we ensure that the deficit remains below 3 per cent. The debt-to-GDP ratio is around 40%. It is still well below the 60% ceiling in the law,” Juda said, quoted on 4 March 2026.
Juda explained that flexibility provides room for the government to use fiscal reserves in responding to global shocks that affect both expenditure and revenue.
“Flexible means including if shocks originate from the global side. Then there is a buffer, there are fiscal reserves that can be used to cushion those shocks,” he added.
Regarding rising oil prices and potential rupiah depreciation, he noted that the Ministry of Finance routinely conducts stress tests across various global scenarios. The government’s financial notes also include macro sensitivity analyses.
He explained that every US$1 rise in the Indonesian Crude Price (ICP) could widen the deficit by around Rp6.8 trillion. Conversely, a Rp100 depreciation of the rupiah against the US dollar would impact the deficit by about Rp0.8 trillion, and a 0.1 percentage point rise in yields could add around Rp1.9 trillion. Nevertheless, stress tests for plausible scenarios indicate the deficit remains within targets.
“Stress tests under plausible scenarios show that the deficit remains below 3%, and debt-to-GDP remains manageable,” the Deputy Finance Minister said.
In terms of financing, the Ministry continues diversifying funding sources to bolster fiscal resilience. Previously, global financing was dominated by the US dollar; now the government is broadening the investor base and currencies.
“Last week we issued global bonds amounting to about US$4.5 billion, but denominated in euros and renminbi. The pricing is very attractive, and yields are very good. Renminbi yields are around 2-3% and Euro yields around 4-5%. The size is very good for our global market,” he said.
On investment, the government has included foreign investment projections in the growth scenario. Domestic investment is also being strengthened through a new government entity, Danantara.
“Danantara now plays an important role. Previously, investments by the government ended up in the APBN; now they are in Danantara. Danantara is now part of Indonesia’s macroeconomic management,” Juda explained.
He added that the government is currently focusing APBN expenditure on government consumption and welfare for the people, especially the lower-middle income groups.
Meanwhile, investment financing is increasingly undertaken through Danantara, as well as support for foreign investment. With these instruments, he is optimistic that the balance between revenue and expenditure can be maintained amid the global dynamics full of uncertainty.