Arnoldus Kristianus, Jakarta – Indonesia's state budget (APBN) recorded a deficit of Rp 31.2 trillion ($1.9 billion) as of Feb. 28, 2025, or 0.13 percent of the nation's gross domestic product (GDP), the Finance Ministry reported Thursday. The deficit was attributed to state revenue of Rp 316.9 trillion and government spending of Rp 348.1 trillion.

Finance Minister Sri Mulyani Indrawati stated that the 2025 budget deficit remains within target, as the government has set an annual deficit of Rp 616.2 trillion, or 2.53 percent of GDP. "This is still well within the planned APBN framework," she said at a press conference.

Indonesia's state revenue saw a year-on-year decline of 20.85 percent from Rp 400.36 trillion in February 2024. Tax revenue dropped by 25 percent to Rp 240.4 trillion, with income tax collection shrinking by 30.19 percent to Rp 187.8 trillion. The customs and excise revenue, however, slightly increased by 2.13 percent to Rp 52.6 trillion.

Deputy Finance Minister Anggito Abimanyu attributed the decline to seasonal fluctuations, explaining that tax revenue tends to rise at year-end due to holiday spending but dips in the early months of the year. "This pattern is normal," he said.

The drop in tax revenue was also linked to lower global commodity prices, with coal falling 11.8 percent, oil down 5.2 percent, and nickel declining 5.9 percent. Additionally, changes in income tax regulations required the government to refund Rp 16.5 trillion in overpaid payroll taxes from the previous year.

Government spending and subsidies

Government expenditure reached Rp 348.1 trillion, with Rp 211.5 trillion allocated for central government spending and Rp 136.6 trillion transferred to regional governments. Spending on subsidies and compensation amounted to Rp 10.7 trillion, including Rp 10.6 trillion for energy subsidies.

The government also allocated Rp 13.6 trillion for electricity discounts, benefiting 71.1 million customers in January and 64.8 million in February. The discount policy, designed to ease inflationary pressure, contributed to a decline in administered price inflation by 7.38 percent in January and 2.65 percent in February. Additionally, Rp 710.5 billion was spent on providing free meals to millions of Indonesian students as of March 12.

Despite the fiscal challenges, the government had financed 35.7 percent of the 2025 budget deficit by February. "This indicates a front-loading approach to budget financing," Sri Mulyani said.

The Finance Ministry remains confident that fiscal policies will stay on track, ensuring economic stability while managing external pressures, including commodity price volatility.

Source: https://jakartaglobe.id/business/indonesia-posts-19-billion-budget-deficit-amid-falling-tax-revenu