Rupiah Weakens as State Budget Deficit Draws Public Scrutiny and Concern

Jakarta, VIVA – The rupiah exchange rate against the US dollar is predicted to remain volatile, though it is expected to close weaker in today’s trading session.

Based on data from the Jakarta Interbank Spot Dollar Rate (JISDOR) published by Bank Indonesia, the rupiah stood at Rp 16,884 per dollar on Wednesday, 18 February 2026. This represented a 40-point weakening from its previous position of Rp 16,844 on Friday, 13 February 2026.

Meanwhile, in spot market trading on Thursday, 19 February 2026, as of 09:00 Western Indonesian Time, the rupiah was transacted at Rp 16,942 per dollar — a decline of 58 points or 0.34 per cent from its previous level of Rp 16,884.

Economic and money market analyst Ibrahim Assuaibi said the state budget (APBN) deficit is currently under public scrutiny. If the government is not prudent in managing state finances, reliance on deficits risks delaying structural reform.

“A deficit strategy cannot automatically reverse economic conditions within a single year. Sustainable growth continues to depend on real investment, regulatory certainty, and labour productivity,” Ibrahim said in his daily research note on Thursday, 19 February 2026.

With the private sector still exercising caution, the government has ultimately become the primary prop for aggregate demand. This is where the risk emerges — the state budget continuously serves as a shock absorber, whilst the revenue base has not grown commensurately with expenditure requirements and interest costs.

At the end of 2025, the deficit widened to Rp 695.1 trillion, or 2.92 per cent of gross domestic product (GDP). This figure was significantly larger than the initial deficit target of Rp 616.2 trillion, or 2.53 per cent of GDP. Under Law Number 17 of 2003 on State Finances, the APBN deficit is capped at a maximum of 3 per cent of GDP.

Although it remains below the 3 per cent threshold, fiscal space has in economic terms already narrowed considerably. On closer examination, the issue is not merely one of ratios, but rather the capacity of the state budget to absorb shocks and perform a stabilising function.

With state revenues still insufficiently robust and the primary balance remaining in deficit, every external shock — rising global yields, rupiah depreciation, and capital outflows — directly pressures the state coffers through interest burdens and fresh financing requirements. In other words, the headline deficit figure may appear safe, but fiscal resilience against global volatility is no longer as comfortable as it was several years ago.