August 19, 2025 | 12:17 pm
TEMPO.CO, Jakarta - Indonesian government plans to raise new debt of Rp781.9 trillion in 2026, with the debt-to-Gross Domestic Product (GDP) ratio projected at 39.96 percent next year.
According to Book II of the 2026 Financial Note, the debt comprises State Securities (SBN) issuance worth Rp749.2 trillion and loans totaling Rp32.7 trillion.
The document states, "The government ensures that debt management is conducted prudently, accountably, and controlled, in order to maintain fiscal sustainability," as quoted on Tuesday, August 19, 2025. The debt-to-GDP ratio has been fluctuating in recent years.
During the Covid-19 pandemic in 2021, the debt ratio was 40.7 percent. It declined to 39.7 percent in 2022 and 39.2 percent in 2023 but rose again to 39.8 percent in 2024. The actual ratio until June 2025 reached 39.9 percent.
Interest payments on debts in the 2026 State Budget Draft are set at Rp599.4 trillion, an 8.6 percent increase from the 2025 outlook of Rp552.1 trillion. This includes Rp538.7 trillion for domestic debt and Rp60.7 trillion for foreign debt.
Deni Friawan, a researcher at the Centre for Strategic and International Studies, noted that the large portion of interest payments suggests the government is "robbing Peter to pay Paul," relying on new loans to cover existing debts.
He also highlighted the growing total debt and rising debt ratio over the past few years.
"Although the portion of interest payments has slightly decreased, its share in national expenditure remains very significant, around 19 percent," Deni said during a media briefing at the CSIS office in Central Jakarta on Monday, August 18, 2025.
He added that the gap between issued debt and interest payments is narrowing, which could push the debt-to-GDP ratio higher and further limit fiscal space.
Deni also criticized the government’s spending priorities for President Prabowo’s programs while maintaining the State Budget deficit below three percent.
"There must be trade-offs, and sacrifices have to be made. In this case, the trade-off is that fiscal allocation to the regions becomes lower," he explained.
For reference, the government has set the Regional Transfer Budget (TKD) for 2026 at Rp 650 trillion, down from this year’s allocation of Rp919 trillion.
Editor’s Choice: Indonesia Projected to Face Rp599 Trillion in Debt Interest Costs Next Year
Click here to get the latest news updates from Tempo on Google News
Indonesia Projected to Face Rp599 Trillion in Debt Interest Costs Next Year
18 jam lalu
Minister of Finance Sri Mulyani Indrawati has confirmed that the target ratio of debt to GDP in 2026 will remain unchanged at 39.96 percent over the past 3 years.
What Expert Says About Prabowo's Zero Deficit Target
22 jam lalu
Researcher at CSIS Riandy Laksono firmly believes that a zero percent deficit, as per Prabowo's aspiration, is unnecessary.
Indonesia's Foreign Debt Reaches Rp7,014.2tn in Q2 2025
2 hari lalu
Indonesia's foreign debt grew by 6.1 percent yoy, which is a slowdown from the 6.4% yoy growth recorded in the previous quarter.
Prabowo Allots Rp402.4tn for Energy Resilience in 2026 State Budget Plan
3 hari lalu
Prabowo Subianto has allotted Rp402.4 trillion for energy resilience in the 2026 State Budget Bill.
4,000 Students to Receive LPDP Funding in 2026, Prabowo Says
3 hari lalu
President Prabowo Subianto targets to provide 4,000 students with LPDP assistance next year. The head of state aims to give more opportunities for students to study at the world's best universities.
House Member: DPR Must Look into Prabowo's Economic Growth Claims
3 hari lalu
In his speech, Prabowo mentioned that Indonesia was able to achieve a 5.12 percent economic growth amidst global pressure.
Free Meal Program Budget Increased to Rp335 Trillion in 2026, Prabowo Confirms
3 hari lalu
The Free Nutritious Meal Program's previous budget was Rp217.86 trillion, with the 2026 allocation up 53.78%.
Prabowo Sets Rp164.4 Trillion Budget for 2026 Food Security, Up Rp8.9 Trillion
3 hari lalu
Prabowo Subianto will allocate Rp164.4 trillion in the 2026 State Budget and Revenue for the food security program, an increase of Rp8.9 trillion from this year.
BGN: Free Nutritious Meal Program Absorbs Rp8.2 Trillion from State Budget
5 hari lalu
The National Nutrition Agency stated that the realization of the state budget for the Free Nutritious Meal program (MBG) has reached Rp8.2 trillion.
Economic Growth: A Comparison Between Indonesia and the US
10 hari lalu
Viewing the difference in economic growth between Indonesia and the United States in the second quarter of 2025.
