- Indonesia posted January deficit of 54.6 trillion rupiah.
- Government spending rose 26% year-on-year in January.
- Revenues increased 20.5%, reaching 172.7 trillion rupiah.
- Free meals programme drove higher social spending.
Early in 2026, Indonesia saw a notable increase in public expenditure. A broader fiscal shortfall emerged during January. Spending linked to President Prabowo Subianto's signature initiative for no-cost meals picked up pace.
The expansion contributed directly to the growing gap between revenue and disbursements. The shift became visible right at the beginning of the year. Fiscal data reflected heavier draws from state coffers.
That first month's shortfall hit 54.6 trillion rupiah - around $3.25 billion - as reported by Reuters, marking 0.21% of GDP in Indonesia, the region's biggest economy. Government outlays, reaching 227.3 trillion rupiah, climbed nearly a quarter compared to January last year.
Notably higher than in January 2025, the deficit reached well above the earlier 0.09% of GDP level. Although revenues climbed 20.5% compared to the previous year - totaling 172.7 trillion rupiah - spending grew even faster.
Spending more on social programs helped push up costs, according to Deputy Finance Minister Suahasil Nazara.
Free Meals Initiative Increases Spending
That jump in spending came as the program expanded quickly. Back then, just a small amount went toward feeding children and expectant mothers. Now nearly twenty times more money flows into lunch deliveries each January. Growth like that reflects wider reach, not higher costs per meal. What started quietly now feeds many across the country.
By February 21, the initiative had supported 60.24 million individuals - rising sharply from under 550,000 just a month earlier. Once complete, its reach is expected to include around 83 million citizens.
"Spending on the social aid programme doubled... This will contribute to growth, especially in household consumption," Suahasil said. Social spending totaled 9.5 trillion rupiah in January.
Spending gets a head start this year, as authorities push outlays early into the first three months - aiming for 809 trillion rupiah overall, a rise of roughly 30% compared to early 2025. According to Minister Purbaya Yudhi Sadewa, just the no-cost meal initiative could take up 62 trillion rupiah during that stretch. Beyond that, another 15 trillion rupiah goes toward food aid and related budget-driven efforts.
Purbaya noted that higher public spending might push early-year economic growth into a range of 5.5% up to 6%. Growth hit 5.39% in late 2025, marking the nation's best quarterly result since 2022.
Fiscal Position Under Scrutiny
Fiscal moves in Indonesia now draw sharp attention from investors, following turbulence in domestic markets early in the year. That unrest stemmed in part from doubts about how consistently policies would be applied. Questions also emerged regarding the autonomy of key institutions. Market reactions since then have reflected lingering uncertainty. Observers continue assessing signals from Jakarta with caution. Confidence hinges on clear, stable decision-making ahead.
Although revenue rose a steady 20.5% in January, it trailed behind rising expenditures. Instead of higher taxes, officials pointed to reduced refund payouts along with ongoing economic momentum as drivers of the increase.
Looking ahead, credit rating firms continue to assess Indonesia's financial trajectory. This past week, Moody's shifted its bond-rating perspective on the nation to negative, pointing toward less consistent policy decisions. Soon after, attention turned toward forthcoming evaluations by Fitch Ratings and S&P Global. The move reflects growing scrutiny over economic governance.
This week, meetings between Fitch representatives and Indonesian institutions are set to take place, according to Febrio Kacaribu. He leads the finance ministry's fiscal policy office. The discussions form part of a sovereign rating review. Scheduled visits help inform the agency's assessment.
"We see that what we have just presented will be very good in reflecting the very solid side of Indonesia's real economic activity, and the state budget is also very good," Febrio said.
With each dollar buying 16,800 rupiah, January's shortfall - 54.6 trillion rupiah - comes out close to $3.25 billion. Though broader than a year earlier, authorities noted the gap stays small when measured against economic output.
Spending picked up pace as the government aimed to boost consumer demand, keeping economic expansion moving at the start of the year. In the months ahead, how tax income matches spending levels will draw attention from markets and credit evaluators judging Jakarta's budget strength.
FAQs
Why did Indonesia's government spending rise 26% in January?
Spending surged mainly due to President Prabowo Subianto's expanded free meals programme. Outlays for the initiative jumped sharply as the number of beneficiaries increased to over 60 million.
How large was Indonesia's budget deficit in January 2026?
The country recorded a 54.6 trillion rupiah deficit, equivalent to 0.21% of GDP. That was wider than the 0.09% deficit posted in January 2025.
How is the free meals programme affecting Indonesia's economy?
Officials say higher social spending will support household consumption and boost growth. The programme is expected to reach 83 million recipients when fully implemented.
What is Indonesia's GDP growth outlook for the first quarter?
The finance minister said growth could range between 5.5% and 6% in the first quarter. That would build on the 5.39% expansion recorded in the fourth quarter of 2025.
Are rating agencies concerned about Indonesia's fiscal health?
Moody's recently revised Indonesia's bond outlook to negative, citing policy predictability concerns. Fitch is meeting government institutions this week ahead of its sovereign rating review.
