Rupiah Weakens Amid Purbaya's Efforts to Broaden Tax Base and Maintain Budget Deficit

Jakarta — The rupiah exchange rate against the US dollar is predicted to remain volatile, closing weaker in Friday’s trading session.

Based on Bank Indonesia’s Jakarta Interbank Spot Dollar Rate (JISDOR), the rupiah stood at Rp16,925 per dollar on Thursday, 19 February 2026 — weakening 41 points from the previous session’s level of Rp16,884 on Wednesday, 18 February 2026.

Meanwhile, in spot market trading on Friday, 20 February 2026, as of 09:06 Western Indonesian Time, the rupiah was transacted at Rp16,908 per dollar, weakening 14 points or 0.08 per cent from the previous position of Rp16,894 per dollar.

Economic and money market analyst Ibrahim Assuaibi said Finance Minister Purbaya Yudhi Sadewa had rejected a proposal from the International Monetary Fund (IMF) for Indonesia to raise employee income tax (PPh 21) in order to keep the state budget deficit below 3 per cent of gross domestic product (GDP).

“The reason for rejecting the IMF’s proposal to raise employee tax is that the budget deficit is still below 3 per cent,” Ibrahim said in his daily research note on Friday, 20 February 2026.

The government will not raise tax rates before the Indonesian economy is truly strong. Rather than increasing employee tax rates, the government is currently focusing on broadening the tax base and closing revenue leakages.

Additionally, the government is seeking to drive economic growth so that tax revenues increase organically and the budget deficit can be reduced.

In its long-term fiscal assessment, the IMF recommended that Indonesia consider a gradual increase in employee taxes as one funding source to strengthen public investment and support long-term development targets towards the Golden Vision 2045.

In the report, the IMF assessed that increased public investment has the potential to drive economic growth and job creation, but requires sustainable funding sources. One option simulated was a gradual increase in labour income tax to reduce reliance on deficit financing.

The IMF also noted that Indonesia’s budget deficit in 2025 stood at approximately 2.92 per cent of GDP, approaching the government’s maximum threshold of 3 per cent.