Cangik quipped, "Lo and behold! That shiny new campus, still as empty as a politician's promises, serves a grand purpose: it's a stage for the illustrious image of Fufufafa! Indonesia, where the sun rises in Konoha and sets in Wakanda, the utopia of vibranium-powered irony, in January 2025, its State Budget (APBN) reported a deficit of Rp23.5 trillion, equivalent to 0.10% of the Gross Domestic Product (GDP). This marked the first deficit for January since 2021, as revealed in a report released by the Ministry of Finance on March 12, 2025, after a month-long delay due to unstable data.
The total state revenue for January was Rp157.3 trillion, reflecting a significant decrease of 28.2% compared to January 2024, when revenues were Rp219.3 trillion. Meanwhile, government spending reached Rp180.8 trillion, which was only slightly lower than the previous year's spending of Rp184.2 trillion. The primary balance recorded a surplus of Rp10.61 trillion; however, this was an 83.7% decline year-on-year from the previous year's figure of Rp65.25 trillion.
By the end of February 2025, the cumulative deficit widened to Rp31.2 trillion or 0.13% of the GDP, with total expenditures amounting to Rp348.1 trillion—approximately 9.6% of the annual budget cap. The government attributed the deficit to higher spending in early 2025 and lower-than-expected revenue collection, particularly in tax receipts.
The delayed release of the APBN data raised concerns among economic observers regarding transparency and investor confidence in Indonesia's fiscal management. Experts warned that continued delays could negatively impact financial markets and economic stability.
The total government spending reached Rp180.8 trillion, which exceeded state revenues of Rp157.3 trillion, resulting in a deficit of Rp23.5 trillion, or 0.10% of GDP. This marks a significant shift from the surplus recorded in January 2024. This is one of The primary factors contributing to the budget deficit (APBN) in January 2025.
The next factor is the decline in Tax Revenues. There was a drastic decline in tax revenues, with collections dropping by approximately 41.9% compared to the previous year. This sharp decrease significantly impacted the overall revenue, contributing to the widening deficit.
Front-Loading of Expenditures is the following factor. The government engaged in substantial early-year spending, with expenditures for January and February totaling Rp. 348.1 trillion, which is about 9.6% of the annual budget cap. This front-loading indicates a strategic decision to allocate funds early in the fiscal year, but it also contributed to the immediate deficit.
And ultimately, Economic Pressures. The ongoing economic challenges, including lower commodity prices affecting revenue from exports, have further strained the budget. The need for increased social and food programs also limited the government's ability to cut spending.
These factors combined created a challenging fiscal environment for Indonesia's budget at the start of 2025, leading to concerns about long-term fiscal sustainability and economic growth prospects.
Despite President Prabowo Subianto's implementation of significant budget cuts in early 2025, government expenditures remain high due to several factors. A substantial portion of the budget is allocated to the flagship free nutritious meal program (MBG), which has ballooned in cost from an initial estimate of Rp 4 trillion to Rp 10.4 trillion. This initiative aims to provide meals for children and vulnerable populations, necessitating a large financial commitment that strains the overall budget
The government has prioritized education, allocating approximately Rp 724 trillion for this sector, marking an increase from previous years. This funding supports various initiatives, including school renovations and scholarship programs, contributing to higher overall expenditures.
The health budget is also significant, with plans for around Rp 197.8 trillion dedicated to improving healthcare services, addressing issues like stunting, and providing free health screenings. These health-related expenditures are essential for public welfare but add to the fiscal burden.
Although there have been cuts in infrastructure spending, certain critical projects still require funding. The Public Works Ministry faces a historic budget reduction of 80%, yet essential projects must be maintained, leading to a complex balancing act between cuts and necessary expenditures
Cuts have been made in various administrative areas, including travel and office supplies; however, these reductions do not fully compensate for the financial demands of ongoing programs and projects. Only specific categories were exempted from cuts, which means essential services still require adequate funding
In summary, while Prabowo's administration aims for austerity through budget cuts, the high costs associated with social programs, education, health initiatives, and essential infrastructure projects continue to drive significant government spending.
The significant government spending on salaries for the 'gemoy' cabinet under President Prabowo Subianto is indeed a notable 'ndasmu' factor in Indonesia's budgetary concerns. President Prabowo's administration has increased the number of ministers from 34 to 53 and added 56 deputy ministers, leading to a total of 109 personnel in key positions. This expansion has raised concerns about the financial implications, including increased salary expenditures and associated costs for support staff and operational needs.
The estimated expenditure for personnel in the 2025 State Budget (APBN) is set at approximately Rp 513.2 trillion, which constitutes about 19.1% of the total budget. This figure reflects a significant increase in employee spending due to the larger number of ministries and officials.
The larger cabinet not only increases salary expenses but also necessitates additional operational costs, such as procurement of official vehicles, office facilities, and other administrative costs. Analysts estimate that the expanded cabinet could add around $125 million to the national budget over five years, exacerbating fiscal pressures.
Salaries for ministers can range from Rp 150 million to Rp 200 million monthly, while deputy ministers earn between Rp 80 million and Rp 150 million, depending on performance allowances. This structure further inflates the overall budget dedicated to personnel expenses.
Critics argue that such a large cabinet may lead to bureaucratic inefficiencies and increased red tape, potentially undermining effective governance and leading to budgetary waste. The complexity of coordinating programs across numerous ministries could hinder operational efficiency.
The delightful spectacle of the Forestry Minister appointing his fellow PSI party members to key positions in the Forestry and Other Land Use (FOLU) Net Sink 2030 program. A masterclass in modern governance—or shall we say, a tragicomedy of clientelism, patronage, and favoritism.
By prioritizing party loyalty over competence, public funds earmarked for climate programs risk being squandered. Instead of addressing deforestation or achieving Indonesia's ambitious carbon sink targets, these funds might quietly vanish into administrative inefficiencies or worse—misuse. This will impact the State Budget (APBN). Norway and the UK are reportedly reconsidering their climate funding due to allegations of nepotism. Should these donors withdraw, the government would need to fill the gap using state funds, further straining the APBN. Every rupiah directed toward sustaining this network of political allies is a rupiah not spent on reforestation, biodiversity conservation, or community development. The APBN becomes a casualty of political expediency.
From an Ethical Quandaries perspective, by appointing PSI members to strategic roles, the minister ensures loyalty at the expense of meritocracy. This practice fosters a culture where public office is treated as a reward for political allegiance rather than a platform for public service.
The minister’s actions exemplify classic patronage politics—where state resources (in this case, jobs and influence) are distributed to consolidate power. This undermines institutional integrity and creates a dependency network that prioritizes personal gain over national interest.
The blatant favoritism in these appointments erodes public trust in government institutions. Citizens may come to see ministries not as pillars of governance but as playgrounds for political elites and their cronies.
When appointments are based on loyalty rather than expertise, oversight mechanisms weaken. This opens doors to corruption and inefficiency. Such practices deepen public disillusionment with democracy, reinforcing the belief that politics is a game rigged for insiders. Indonesia risks being perceived as a nation where governance is subservient to political machinations, potentially deterring foreign investment and collaboration.
The Forestry Minister’s actions offer a sobering lesson in how not to govern. While PSI members may rejoice in their newfound roles, the APBN groans under the weight of inefficiency, and Indonesia’s ethical foundations crack under the strain of favoritism. A true Shakespearean tragedy—if only it weren’t real life!
While President Prabowo has aimed for a more focused governance approach through an expanded cabinet, the resulting increase in salary expenditures poses significant challenges to Indonesia's fiscal stability amid ongoing budget constraints.
The budget deficit in Indonesia has significant implications for national debt. With the projected budget deficit set at IDR 616.2 trillion (approximately 2.53% of GDP) for 2025, the government will need to increase borrowing to finance this shortfall. This is expected to lead to a rise in government bond issuances, which are projected to reach IDR 1,442.6 trillion, including IDR 642.6 trillion for new bonds and IDR 800 trillion for maturing debt.
The Prabowo administration's spending initiatives, such as free meals and housing programs, are likely to accelerate debt accumulation. Economists predict that if these costly programs continue without corresponding revenue increases, the fiscal deficit could exceed the legal cap of 3% of the GDP established in 2003. This could result in a higher national debt-to-GDP ratio, potentially reaching 50%, as suggested by the President.
The rising debt levels raise concerns about fiscal sustainability. If the government continues to maintain a high deficit while accumulating debt, it may face challenges in servicing this debt in the future. The increased reliance on bonds and loans could lead to higher interest payments, further straining public finances.
Persistent deficits and rising debt levels may negatively impact investor confidence in Indonesia's fiscal management. Concerns about the government's ability to manage its finances could lead to higher borrowing costs and volatility in financial markets. The budget deficit is closely linked to increasing national debt, with significant implications for Indonesia's fiscal health and economic stability. Continued deficits without adequate revenue generation could lead to unsustainable debt levels and potential economic challenges in the future.
The national debt has significant implications for a nation's independence, particularly in the context of Indonesia. High levels of national debt can reduce economic independence as the government becomes reliant on foreign lenders or international financial institutions. This reliance may lead to external influence over domestic policy decisions, including fiscal and monetary policies, as creditors often impose conditions on loans.
A substantial portion of Indonesia's budget is allocated to servicing debt (paying interest and principal), which limits resources available for development projects, social programs, and infrastructure. This reduces the government's ability to independently address national priorities and achieve long-term economic goals.
Dependence on foreign-denominated debt makes Indonesia vulnerable to currency fluctuations and global economic changes. For instance, a depreciation of the rupiah increases the cost of repaying foreign debt, potentially leading to financial instability and reducing the nation's economic resilience
High debt levels can constrain the government's ability to implement independent policies. For example, during periods of fiscal stress, the government may need to prioritize austerity measures or tax increases instead of pursuing growth-oriented strategies
Rising debt can also affect public confidence in the government's ability to manage finances effectively. This could lead to political pressures and challenges in maintaining national unity and trust in leadership.
While national debt can be a useful tool for financing development, excessive borrowing risks undermining a nation's economic sovereignty, limiting its ability to act independently in both domestic and international arenas. Careful debt management is essential to safeguard Indonesia's long-term independence and stability.
The ideal debt-to-GDP ratio varies among different studies and contexts, but several key findings emerge from some pieces of literature. Research indicates that moderate levels of public debt can stimulate economic growth. For instance, studies suggest that a debt-to-GDP ratio around 60% to 90% is generally considered sustainable and does not negatively impact economic growth. Specifically, a ratio above 90% has been associated with reduced growth rates, as highlighted by Reinhart and Rogoff's findings. Some studies propose higher optimal debt thresholds. For example, one study suggests an optimal debt-to-GDP ratio of approximately 129.55%, while others indicate that ratios between 85% and 100% are preferable for maintaining economic stability without hindering growth. Ratios exceeding 77% are often seen as risky, potentially leading to economic stagnation or increased vulnerability to financial crises. Countries with debt levels above this threshold may face challenges in repaying debts and maintaining fiscal health.
The sustainability of national debt is also influenced by factors such as economic growth rates, interest rates, and fiscal policies. A positive long-term interest-growth differential can help manage higher debt levels, while negative differentials may exacerbate the risks associated with high debt.
So, while the legal limit set by Indonesia is 60%, theoretical frameworks suggest that an optimal debt-to-GDP ratio could range from 60% to over 100%, depending on various economic conditions and growth dynamics. The key is to balance borrowing with sustainable growth to ensure long-term fiscal health.
As of February 28, 2025, Indonesia's State Budget (APBN) reported a deficit of Rp 31.2 trillion, which is equivalent to 0.13% of the country's Gross Domestic Product (GDP). This figure was disclosed by Finance Minister Sri Mulyani Indrawati on March 13, 2025, during a press conference.
Total state revenue reached Rp 316.9 trillion, accounting for 10.5% of the annual target. This revenue comprises tax collections and non-tax state revenue. Total government spending was recorded at Rp 348.1 trillion, representing 9.6% of the total allocated budget for the year. This includes expenditures from both central government ministries and transfers to regional governments. Despite the overall deficit, the primary balance showed a surplus of Rp 48.1 trillion, indicating that when interest payments on debt, revenues exceeded expenditures. The reported deficit remains within the target set in the 2025 budget design, which anticipates a total deficit of Rp 616.2 trillion or 2.53% of GDP for the year.
As of the specified dates, the Indonesian national debt figures are as follows:
December 31, 2024, the total government debt was reported at approximately IDR 8,444.87 trillion. This figure represents an increase from previous months and reflects the ongoing fiscal policies in place.
January 31, 2025: The exact national debt figure for this date is not explicitly provided in the search results. However, it can be inferred that the debt likely continued to rise due to ongoing expenditures and financing needs associated with the budget deficit.
February 28, 2025: The national debt position remains unspecified in the available data for this date. However, it is crucial to note that by this time, the state budget (APBN) recorded a deficit of IDR 31.2 trillion, indicating continued reliance on borrowing to finance government operations.
Overall, while specific debt figures for January and February are not detailed in the results, the trend indicates a consistent increase in national debt aligned with the government's fiscal strategies and budgetary challenges.
As of December 31, 2024, Indonesia's national debt stood at IDR 8,444.87 trillion, which has significant implications for the country's economic stability and fiscal health. What are the implications of IDR 8,444.87 Trillion Debt?
The debt level corresponds to approximately 39.13% of Indonesia's GDP as of mid-2024, which remains below the legal limit of 60% set by Indonesian law. However, it indicates a rising trend in borrowing that could affect fiscal sustainability if not managed carefully.
A high debt level necessitates substantial budget allocations for interest payments and debt servicing, which can limit funds available for essential public services and development projects. This could hinder economic growth and infrastructure development.
With a significant portion of the budget tied up in debt servicing, Indonesia may face challenges during economic downturns or global financial crises. High debt levels can increase vulnerability to external shocks, potentially leading to higher borrowing costs and reduced investor confidence.
In June 2024, the national debt was reported at IDR 8,353.02 trillion, showing an increase of approximately IDR 91.85 trillion over the month. This upward trajectory reflects ongoing government borrowing to finance budget deficits and economic initiatives.
The national debt has seen a consistent rise from lower levels in previous years. For instance, in June 2023, the debt was significantly lower at around IDR 7,779 trillion. This indicates an increase of over IDR 665 trillion within a year.
The debt-to-GDP ratio has fluctuated over the years but has generally trended upwards since reaching a low of approximately 25.9% in June 2015. The recent ratios indicate a gradual increase from around 38.71% in mid-2024 to the current level of approximately 39.13%.
The current national debt level of IDR 8,444.87 trillion poses both challenges and opportunities for Indonesia's economic management. While it remains within legal limits, continued increases in debt could lead to fiscal constraints and vulnerabilities if not addressed through effective revenue generation and expenditure management strategies. The government will need to balance its borrowing with sustainable growth initiatives to maintain economic stability and independence.
Indonesia—a land of stunning diversity, endless rice fields, and, ironically, millions of hungry people in a country that prides itself on being a top agricultural producer. Over 23 million Indonesians cannot meet their dietary needs, while 20% of children under five are stunted, a polite way of saying they’re too short for their age because they’ve been malnourished. But don’t worry, the government has a plan: more meetings and colorful charts in their Food Security and Vulnerability Atlas
The unemployment rate is 5.6%, which sounds decent until you realize that many are underemployed, earning barely enough to buy instant noodles. Meanwhile, 9.5% of the population lives below the poverty line, which is defined as earning less than $1.90 a day. Is this extreme? Well, let’s just say it’s not quite “moderate” when nearly 40% of children in East Nusa Tenggara are stunted.
Want to compare it with America? Yes, hunger is a significant issue in the United States. Around 13.5% of households (1 in 7) experienced food insecurity in 2023, impacting 47.4 million Americans, including 13.8 million children. Severe food insecurity, where meals are skipped due to lack of affordability, affected 5.1% of households.
The unemployment rate in the U.S. was approximately 3.9% as of late 2024, which is considered low. The poverty rate stood at 12.9%, affecting 43 million people, including 10 million children While the unemployment level is relatively low, the poverty rate and food insecurity suggest moderate socioeconomic challenges, especially for vulnerable groups.
Now, back to Indonesia. Indonesia’s food insecurity is like a tragic comedy where farmers grow rice but can’t afford to eat it. Climate change and inflation play the villains, while policymakers act as clueless heroes armed with decrees that look good on paper but achieve little on the ground.
In his influential textbook Economics (co-authored with William Nordhaus in later editions), Paul Samuelson discusses employment, economic growth, and income distribution as fundamental aspects of macroeconomics. Let's analyse Indonesia's macroeconomic landscape, as analyzed through the lens of Paul Samuelson’s foundational economic pillars.
Indonesia’s labour market is undergoing a seismic shift toward digital skills. The tech sector (e-commerce, fintech, and IT) is projected to drive a $109 billion digital economy by 2025, creating demand for roles like software developers, cybersecurity experts, and data analysts. Major platforms like Tokopedia and Shopee are expanding logistics and digital marketing teams, reflecting the sector’s job-creation potential.
Despite a labour force of 141.3 million (2023), structural issues persist. Limited geographic mobility and skill gaps hinder workforce alignment with job opportunities, particularly in high-growth sectors. The World Bank highlights weak wage growth and regional disparities, with urban areas benefiting disproportionately from tech-driven jobs.
While demand for digital skills surges, training programs lag. For example, Indonesia faces a projected shortfall of 100,000 cybersecurity experts by 2025, underscoring the urgency for upskilling initiatives.
Indonesia’s GDP is forecast to grow at 5.1% annually (2024–2026), supported by public investment, consumer demand, and a rebound in business activity. The IMF echoes this optimism, projecting 5.0% growth in 2024 and 5.1% in 2025. The digital economy, valued at $32 billion in 2023, is expected to triple to $83 billion by 2025, fueled by fintech and peer-to-peer lending. Growth remains vulnerable to volatile commodity prices (e.g., palm oil, coal), which could dampen export revenues and fiscal stability.
The World Bank emphasizes the need for regulatory reforms to boost private investment and productivity, particularly in manufacturing and services. Without addressing bureaucratic inefficiencies, long-term growth targets (e.g., high-income status by 2045) may stall.
Despite a 4.7% rise in per capita disposable income (2023), inequality remains stark: the top 10% of households control 30% of total income. Post-pandemic recovery has exacerbated disparities, with wage growth lagging behind productivity gains.
Economic activity clusters in Java and Sumatra, leaving Eastern Indonesia underdeveloped. The World Bank notes a slowdown in reducing regional income gaps, perpetuating spatial inequality
While social programs (e.g., education and infrastructure spending) aim to bridge gaps, limited access to formal financing for 63 million MSMEs (mostly informal) stifles inclusive growth.
The digital boom risks widening inequality if rural populations and informal workers lack access to training and financing. High public spending (e.g., President Prabowo’s social programs) risks fiscal sustainability, potentially diverting resources from human capital investments critical for equitable growth.
Geopolitical tensions and commodity volatility threaten to undermine growth while worsening living costs for lower-income households.
To align with Samuelson’s emphasis on balanced growth, Indonesia must invest in Human Capital. Scaling up digital training and vocational programs to meet sectoral demands.
Next is to strengthen Social Safety Nets. Target subsidies and expand financial inclusion for MSMEs to reduce inequality
Also by enhancing regulatory frameworks to simplify business licensing and attract FDI to diversify beyond commodities.
While Indonesia’s macroeconomic fundamentals remain robust, addressing structural inequities and fostering inclusive growth will determine its success in transitioning from a middle-income to a high-income economy.
Indonesia faces multifaceted challenges in addressing income disparities. Rural and low-income households struggle to access quality education, perpetuating intergenerational poverty. For example, a domestic worker was forced to drop out of school at 15 due to financial constraints, limiting his or her job prospects to informal sectors. Despite the high demand for digital skills, training programs lag, leaving 63 million MSMEs (mostly informal) without pathways to formal employment. Educational inequality has the highest impact on overall inequality, yet targeted programs (e.g., scholarships for the poor) require expansion and better implementation.
Programs like Raskin (rice subsidies) show minimal impact on inequality, while cash transfers (BLSM) require a 15-fold budget increase to meaningfully reduce the Gini index. Social aid often fails to reach the most vulnerable, such as informal workers and rural populations. For instance, a tofu seller, earns less than $4 daily despite decades of work, with no access to safety nets. Poverty remains concentrated in Eastern Indonesia, where infrastructure and program accessibility lag behind Java and Sumatra.
The richest 1% control 46% of national wealth, while the four wealthiest Indonesians hold more assets than the poorest 100 million. Corporate and elite monopolies over land restrict economic opportunities for smallholders and rural communities, exacerbating spatial inequality. Over 70% of workers are in informal jobs with low wages and no social security. Women face systemic barriers, earning 30% less than men in similar roles. Rural-to-urban migration strains job markets, with limited high-skilled opportunities for migrants lacking education.
Subnational governments lack clarity on inequality metrics, leading to poorly designed 'pro-equality' programs. Fuel and energy subsidies disproportionately benefit the wealthy, diverting funds from pro-poor investments. Anti-poverty policies require multisectoral collaboration but often operate in silos
Volatile prices for exports like palm oil and coal threaten fiscal stability, disproportionately affecting low-income households. While boosting GDP, globalization risks widening inequality if not paired with equitable workforce development.
Indonesia’s progress in reducing poverty shows promise, but systemic reforms are critical to dismantling entrenched disparities. Without addressing these structural barriers, the Gini ratio—stagnant at 0.38—will remain a persistent hurdle to inclusive growth," Cangik concluded.
