Why the Government is Boosting Spending from the Start of the Year

Deputy Finance Minister Juda Agung has responded to criticism over the high level of government spending in the first quarter of 2026. According to him, this is indeed designed to drive economic growth from the beginning of the year.

Government spending in the first quarter of 2026 recorded growth of 21.8% year-on-year (yoy), with the budget deficit reaching 0.93% of Gross Domestic Product (GDP) or Rp 240.1 trillion.

“This is what has been heavily scrutinised regarding the deficit already at 0.93% in one quarter. Because this is by design, the government wants economic growth not just at the end of the year,” said Juda at the Central Development Coordination Meeting 2026 in Preparation for the 2027 Government Work Plan in Jakarta on Thursday, 7 May 2026, quoted from Antara.

By boosting government spending at the start of the year, Juda believes economic growth will be evenly distributed throughout the year, from the first to the fourth quarter of 2026. Amid geopolitical uncertainties due to military conflicts in West Asia involving the US, Juda praised Indonesia’s economic growth achievement of 5.61%, driven by various government policies.

Compared to other countries such as Malaysia, China, Singapore, South Korea, and the US, Indonesia’s economic growth in the first quarter of 2026 was higher, surpassed only by Vietnam. However, he emphasised that Indonesia’s fundamentals are better than Vietnam’s, as reflected in Vietnam’s foreign exchange reserves below 3 months of imports, while Indonesia’s are approaching 6 months.

Another positive note, according to Juda, is that April 2026 inflation on an annual basis was 2.42%, suspected to be the lowest and most stable in recent years. This indicates that Indonesia’s economic growth is high, with stability maintained. Likewise, Indonesia’s budget deficit can be kept below 3%, and debt to GDP remains at 40%.

“This is what we need to maintain together, how we can achieve high growth, but on the other hand, short-term and long-term economic stability can still be well maintained,” said the former Deputy Governor of Bank Indonesia.

Furthermore, the high rise in global oil prices to US$100 per barrel is seen as not significantly shaking Indonesia, and it is one of the most resilient countries to energy shocks. This is because Indonesia has oil and gas, coal, and renewable energy.

Next, debt financing is said to be well managed, currently reaching 35.1% of the state budget or Rp 256.7 trillion from the beginning of the year to 31 March 2026. Debt financing fulfilment is on track through anticipatory measures and active cash and debt management to ensure adequate government cash availability and a strong more budget balance (SAL).

Further, according to Juda, the performance of the Government Securities (SBN) market remains good despite the US 10-year bond yield temporarily rising, but then stabilising again. “If the yield can still be maintained like this, what does it mean? It means that both domestic and global investors still trust our fiscal condition. If the fiscal condition were collapsing, it would certainly rise sharply like during the crises in 2008, 2018, and so on. But now it is well maintained,” he said.

Compared to countries like the Philippines, India, South Africa, Mexico, and Brazil, the US 10-year bond yield spread is relatively low at 237 basis points (bps) as of 4 May 2026 year-to-date (YTD). “We can still maintain the spread, and this shows that confidence in our fiscal position is still strong,” said Juda Agung.