Paradox of a Budget-Rich State and a People Entrapped by Online Loans

In many households, the end of the month is no longer about how much budget remains, but which loan app to target to cover the next month’s needs. Paying for children’s school fees, redeeming medicine at the pharmacy, or simply refilling LPG gas often requires patching with digital debt that can be disbursed in minutes. This reality is too quickly judged as personal weakness. Yet behind it lies a structural root that makes debt the only sensible way out at present. As of February 2026, the Financial Services Authority (OJK) recorded outstanding online loans or pinjol reaching Rp100.69 trillion, up 25.75 percent year-on-year. PT Pefindo Credit Bureau reported paylater transactions growing 86.7 percent to Rp56.3 trillion in the same period. Total public debt in these two digital channels has breached Rp125.64 trillion as of January 2026, based on the latest OJK report. These figures are not merely milestones of national digital financial inclusion success. On the other hand, they mirror the cracked condition of Indonesian households whose financial resilience is thinning over time. Some time ago, we widely discussed the phenomenon of dipping into savings, and now the situation has shifted one step deeper to dipping into debt. The scale of paylater penetration is no small matter, with the number of accounts for this product reaching 31.23 million in January 2026. This picture shows that dependence on consumer debt has become a daily survival pattern for many households in Indonesia. This growth also far exceeds the growth of formal bank consumer credit throughout 2025. OJK data shows bank consumer credit growing only around 7.4-8 percent in mid-2025. The expansion of pinjol and paylater, multiplying far above that figure, indicates a migration of borrowers from formal channels to looser digital ones. The aggregate non-performing loan (NPL) rate for pinjol has also risen sharply, from 2.52 percent in January 2025 to 4.38 percent in January 2026. Bank Indonesia, as of March 2026, also noted the savings-to-income ratio for the public declining from 17.7 percent to 17.6 percent. These two indicators confirm that borrowers are increasingly struggling to repay obligations amid shrinking saving space. Indeed, the aggregate pinjol NPL is technically still considered controlled by financial authorities. However, figures that appear stable on paper do not reflect the true financial health of borrowers. On the contrary, relatively low NPLs are often maintained in harmful ways, namely the pattern of digging a hole to fill another across platforms. The logic of digging a hole to fill another is now real and massive in society. Instalments from one loan are paid with debt two, then instalments from two with debt three, and so on. As long as this rotation runs, NPL remains visibly healthy on paper, but household finances in the field are increasingly ill. Daily pinjol interest rates, commonly around 0.3 percent or equivalent to about 9 percent per month, also add a heavy burden. For a Rp1 million loan with a one-month tenor, the total repayment can approach Rp1.1 million, not including late fees. For households whose income is already exhausted on consumption, interest this high becomes a second blow after the principal debt itself. The composition of public debt also needs sharp scrutiny as the main root of the problem. Most citizens do not borrow to start businesses, add working capital, or invest in long-term productive assets. They borrow instead to pay for daily needs, cover electricity bills, fund children’s education, and consumption that could actually be postponed.