February 2026 State Budget Deficit Reaches Rp135.7 Trillion, Economists: Due to Increased Expenditure at Start of Year

An economist from PT Bank Danamon Indonesia Tbk, Hosianna Evalita Situmorang, noted that Indonesia’s fiscal deficit for February 2026 reached approximately Rp135.7 trillion, equivalent to 0.53 per cent of GDP and 19.8 per cent of the total budget. She attributed this to increased government expenditure at the beginning of the year.

Government expenditure in February 2026 reached Rp493.8 trillion, representing a 41.9 per cent year-on-year increase or 12.9 per cent of the budget allocation. This was driven by material expenditure of Rp67.6 trillion (up 269.0 per cent year-on-year), largely related to the Free Nutritious Meals Programme (Rp39 trillion realised through February 2026), and subsidies and compensation of Rp51.5 trillion (up 385.4 per cent year-on-year).

Situmorang warned that temporary spikes in oil and gas prices resulting from the US-Iran conflict could increase subsidies and compensation expenditure. However, higher coal and crude palm oil (CPO) prices could boost non-tax revenue, particularly following the increase in CPO export tariffs to 12.5 per cent from 2 March.

Government revenue reached Rp358.0 trillion, up 12.8 per cent year-on-year or 11.4 per cent of the budget. Non-tax revenue stood at Rp68.0 trillion (11.3 per cent year-on-year), hampered by declining oil production. Customs revenue reached Rp44.9 trillion (up 13.4 per cent year-on-year) amid rising commodity reference prices.

Tax receipts recovered to Rp290.0 trillion (up 20.6 per cent year-on-year; 10.8 per cent of budget), with personal income tax rising to Rp104.9 trillion (up 18.7 per cent year-on-year) and net value-added tax surging to Rp85.9 trillion (up 97.4 per cent year-on-year) due to lower refunds.

Stronger domestic demand, an improving business cycle in the real sector, and optimisation of the Coretax system supported revenue performance in the first two months of 2026. However, interest payments rose to Rp99.8 trillion (up 25.9 per cent year-on-year), consuming 34 per cent of tax receipts and indicating fiscal rigidity.

Finance Minister Purbaya Yudhi Sadewa noted that the average price of Indonesian crude oil (ICP) remains below the assumptions set in the 2026 state budget. He affirmed that the state budget allocation for meeting fuel subsidy requirements remains sufficient. However, he warned that rising oil prices would inevitably lead to increased prices for goods and services as well as depreciation of the rupiah against foreign currencies. If oil prices reach US$120 per barrel, the 2026 APBN deficit could expand to as much as 3.6 per cent.