Ria Fortuna Wijaya, Arnoldus Kristianus, Jakarta – The government is accelerating seasonal fiscal support ahead of Ramadan, including the early disbursement of Rp 55 trillion ($3.2 billion) in holiday allowances for civil servants, military personnel and police, scheduled to begin in the first week of the fasting month.
"The holiday allowance will be disbursed in the first week of Ramadan," Finance Minister Purbaya Yudhi Sadewa said on Wednesday, adding that the move is intended to strengthen purchasing power and support economic activity during a period typically marked by rising consumption.
The government is also preparing a Rp 12.8 trillion ($763.29 million) stimulus package in the first quarter of 2026, combining transport fare discounts with expanded social assistance such as rice and cooking oil to shore up household spending and stabilize prices.
Purbaya projected the economy could grow 5.5% – 6% in the first quarter, supported by stronger consumption during the Lunar New Year and Idulfitri holidays. "We estimate the economy could grow between 5.5% and 6% in the first quarter," he said.
With household consumption accounting for more than half of GDP, festive spending can meaningfully lift short-term growth, underscoring Indonesia's consumption-driven economic structure.
Economist Endrizal Ridwan of Andalas University said the accelerated Ramadan bonus and stimulus package are designed to capitalize on that dynamic. "Consumption still dominates our economy, contributing around 53% to GDP," he said, noting that consumption growth contributes roughly 2.6% to overall economic expansion.
However, he cautioned that seasonal demand alone cannot sustain the government's 8% growth ambition. "If stimulus is financed by widening the fiscal deficit, today's consumption will be paid for by lower consumption in the future," Ridwan said. "Short-term growth driven by temporary stimulus cannot be maintained."
He added that excessive festive stimulus risks resource misallocation, as activity shifts into temporarily boosted sectors only to contract after the holiday period.
"To achieve sustainable growth, the focus must be on quality investment and human capital," Ridwan said. "Holiday stimulus should strengthen domestic production rather than imports, so increased capacity can later support exports."
While Ramadan-related spending may cushion near-term risks, economists agree that durable expansion will ultimately depend on structural reforms that generate momentum beyond recurring festive cycles.