State Spending Boosts Economic Optimism
The surge in state spending at the beginning of 2026 is deemed to be providing real impetus to the domestic economy. Amid rising government expenditure, indicators of state revenues also show a positive trend, fostering optimism for future economic growth.
Executive Director of NEXT Indonesia Center, Christiantoko, sees this combination as an early signal of strengthening recovery.
“The current developments provide positive signals. Government spending absorption is rising, state revenues are also growing strongly, thus the enthusiasm for economic activity offers good hope ahead,” he stated in his comments on Tuesday (7/4).
Government data shows that state revenues in the first quarter of 2026 reached Rp574.9 trillion, or a 10.5% year-on-year growth. This increase was primarily supported by tax revenues that surged 20.7% to Rp394.8 trillion.
“This achievement provides healthier fiscal space to support the increased spending,” said Christiantoko.
On the other hand, state spending also rose sharply. By the end of March, spending realisation reached Rp815.0 trillion, or up 31.4% compared to the same period last year. The budget deficit was recorded at Rp240.1 trillion, equivalent to 0.93% of Gross Domestic Product (GDP).
Although the deficit increased, Christiantoko assesses that the figure remains within controlled limits and actually reflects a deliberate fiscal strategy.
“If examined holistically, the figure actually reflects a measured fiscal strategy,” he said.
According to him, the government is consciously pushing spending at the start of the year to maintain growth momentum. The spending realisation, which has reached 21.2% of the annual target, also indicates acceleration compared to previous years’ patterns, which averaged around 17%.
“Increased spending compared to the previous year shows an expansionary effort that is indeed needed, especially at the beginning of the year, to maintain recovery momentum and strengthen the domestic economy’s driving force,” explained Christiantoko.
The increase in spending was triggered, among others, by strategic programmes and seasonal factors such as Eid, including a Rp15 trillion stimulus rolled out by the government to boost public consumption.
“Higher government spending becomes an important driver to maintain purchasing power and strengthen economic circulation,” said Christiantoko.
While aggressive on the spending side, the government is assessed to still maintain fiscal discipline by keeping the deficit below the 3% threshold of GDP.
“Thus, the 0.93% deficit in the first quarter of 2026 should be seen as part of a measured fiscal policy strategy. As long as it is managed carefully and remains within the established limits, this step has the potential to strengthen the foundation for future economic growth,” he concluded.
The government is committed to not raising the price of subsidised fuel throughout 2026.