Why is Indonesia's State Budget Deficit? Purbaya's Aides Explain

Jakarta, CNBC Indonesia – Director General of Financing and Risk Management (DJPPR) at the Ministry of Finance, Suminto, outlined the position of the State Budget (APBN) being in a deficit and its relation to the issuance of government securities. He explained this to pupils, students and attendees at the second day of Jogja Financial Festival 2026, Saturday 23 June 2026.

‘To start from a somewhat conceptual view of the APBN… the APBN is one of the important instruments for development. We want all growth engines to work well, to support development,’ Suminto said.

The development and growth of the economy are required to push forward the welfare of the Indonesian people and the engine is the APBN. To achieve high growth, the fiscal engine, namely the APBN, must be maximised.

In addition, the private sector must also be maximised to support growth. For this reason, the financial sector becomes a key point in economic activity.

‘The financial sector is the lifeblood of economic activity. The financial sector supports the fiscal as well as supporting the real sector as the important engine of development,’ he said.

Suminto added that to maximise the APBN’s role for growth and development, fiscal policy needs to be expansionary. This expansionary fiscal stance carries risks, namely a deficit in the APBN.

‘The APBN needs to be expansionary, meaning the government needs to spend more to finance development. And to achieve the larger expenditures and development objectives, our APBN is designed to run a deficit,’ he explained.

‘The deficit is the way we manage an expansionary APBN to enable faster growth and faster construction,’ he added.

With an APBN designed to be in deficit, the government must borrow. Suminto explained that in the past, because many countries could not access markets, debt was undertaken by drawing facilities from multilateral development banks, such as the World Bank, Asian Development Bank (ADB), Islamic Development Bank, and others.

With current developments, many countries have begun to access financial markets. Indonesia has also become a stronger and more capable country so that it can access global financial markets. Therefore, when the government needs to borrow to finance the APBN to accelerate growth and development, issuing government securities becomes an option.

Debt is no longer dominated by bilateral loans between countries or loans from development banks or multilateral development banks.

‘Even in the context of our APBN financing, for debt financing now, 85%-87% of debt financing for the APBN comes from the issuance of government securities,’ he said.

‘Not anymore foreign loans. Multilateral, bilateral. Government securities themselves come in a variety of forms,’ he added.

As for the forms of government securities issued by the Indonesian government, they are varied, there are conventional and shariah, such as government sukuk that are absorbed by institutional investors, such as banks, insurers and pension funds. There is also financing through Retail Government Bonds (SBN) for individual investors.