IMF and World Bank Warn Indonesia on Subsidies, Purbaya Assures State Budget is Secure

JAKARTA - The Indonesian government has come under scrutiny from the International Monetary Fund (IMF) and the World Bank regarding its subsidy policies, which are seen as potentially burdensome to the state budget.

Finance Minister Purbaya Yudhi Sadewa revealed that both institutions have warned the government against overextending subsidies to preserve the health of the State Revenue and Expenditure Budget (APBN).

“The main message from the IMF and the World Bank is the same: do not overdo subsidies, or your country’s budget will collapse,” said Purbaya to the media at the Ministry of Finance in Jakarta on Tuesday (21/4/2026).

The government, he explained, only provides subsidies for certain types of fuel, while other prices are left to market mechanisms.

“We are not overdoing it; what we subsidise, we subsidise, and what we do not, we let go to the market,” he stated.

He added that subsidy management is conducted with principles of prudence to avoid disrupting long-term fiscal balance.

Purbaya noted that Indonesia has several layers of protection to maintain budget stability, including fiscal reserves.

“They also know that our cash management is quite good, and we told them we still have a third or fourth layer of defence in the form of SAL,” he said.

The Surplus Budget Balance (SAL) serves as one of the fiscal buffers the government possesses to face economic pressures.

“In normal times, it’s actually silly because the money isn’t used. But in situations like this, it can be useful,” he remarked.

Purbaya assured that with disciplined fiscal management and adequate reserves, the government remains optimistic that the APBN deficit can be kept below the safe 3% threshold against gross domestic product (GDP), even amidst global pressures.