Economist: Increasing the Deficit and Borrowing Heavily Is Not the Right Choice
JAKARTA, KOMPAS.com - Plans to widen the State Revenue and Expenditure Budget (APBN) deficit are deemed not the right step amid increasing fiscal pressures and global uncertainties.
Economist from the Bright Institute, Awalil Rizky, views the proposal to expand the deficit limit above 3% of Gross Domestic Product (GDP) as potentially worsening the already vulnerable fiscal condition from 2025.
“Increasing the deficit and borrowing heavily is not the right choice in the current situation,” Awalil stated in his remarks on Wednesday (18/3/2026).
In that scenario, the APBN deficit, originally targeted at 2.68% of GDP, could widen to 3.18%, 3.53%, or even 4.06%.
However, President Prabowo Subianto is said to favour budget efficiency measures over widening the deficit, including spending savings and optimising digitalisation to plug fiscal leakages.
According to Awalil, the current situation cannot be equated with the Covid-19 pandemic era when the government expanded the deficit for emergency needs.
He assesses that global risks have actually been detectable for a long time, so they should have been anticipated through more mature mitigation.
From a fiscal fundamentals perspective, he highlights several indicators showing weakness.
The debt-to-GDP ratio has risen from 30.23% in 2019 to 40.46% in 2025.
Meanwhile, the debt service burden ratio to state revenue has also increased significantly.
Additionally, state revenue in 2025 is said to have experienced a sharp decline, while state expenditure has instead increased due to large priority programmes and bureaucratic structures.
In such conditions, deficit expansion is seen as risking the need for greater debt financing.
Yet, domestic financing capacity from sources like banking, pension funds, and insurance is deemed limited, while foreign investor interest remains uncertain amid global uncertainties.
Awalil views reliance on Bank Indonesia to absorb government bonds as potentially posing further risks to monetary stability and the financial sector.