Indonesia's State Budget Records Primary Surplus of Rp 48.1 Trillion, Overall Deficit at Rp 31.2 Trillion

As of the end of February 2025, Indonesia’s state budget (APBN) recorded a primary balance surplus of Rp 48.1 trillion, while the overall balance showed a deficit of Rp 31.2 trillion.

The deficit arose because total state revenue reached only Rp 316.9 trillion, while government spending was higher at Rp 348.1 trillion.

The primary balance is calculated as the difference between total state revenue and government spending, excluding interest payments on debt, as defined in the Indonesian State Budget Posture document published by the Directorate General of Budget (DJA) at the Ministry of Finance.

Based on these figures, it is estimated that the government has already paid Rp 79.3 trillion in interest expenses in the first two months of the year, from a total interest payment budget of Rp 552.85 trillion in the 2025 APBN, as outlined in the 2025 Financial Note.

However, this estimate has not been officially confirmed by the Ministry of Finance. Neither Suminto, Director General of Debt Management (DJPPR), nor Riko Amir, Director of Financing Strategy and Portfolio at DJPPR, have responded to inquiries on the matter.

High Debt Interest Burden Drives APBN Deficit

Economists believe that the surplus in the primary balance despite the overall budget deficit signals a significant government debt interest burden in early 2025.

"This indicates that interest payments take up a large portion of government expenditure. When included in the budget calculations, the initially surplus primary balance turns into a deficit," said Yusuf Rendy Manilet, an economist at the Center of Reform on Economics (CORE) Indonesia, on Friday (March 14, 2025).

Yusuf also noted that this trend aligns with the substantial debt maturities expected over the next five years, which could increase interest payment obligations until 2029.

Similarly, Paramadina University economist Wijayanto Samirin pointed out that a primary surplus amid a fiscal deficit indicates very limited non-interest government spending.

"Non-interest spending remains minimal, meaning interest costs take up a large portion of government expenditure," he emphasized.

He speculated that the low non-interest spending could be due to either budget efficiency or poor government effectiveness caused by President Prabowo Subianto's large cabinet.

"This could be the result of efficiency measures or, conversely, poor government effectiveness due to a large cabinet with many new ministries and officials still adjusting," Wijayanto stated.

Impact on Indonesia’s Financial Stability

Meanwhile, Ronny P. Sasmita, Senior Analyst at the Indonesia Strategic and Economics Action Institution, highlighted that the primary balance surplus indicates the government is still capable of covering its operational expenses without relying on new debt.

Although state revenue in early 2025 reached only Rp 316.9 trillion, down 20.82% from Rp 400.36 trillion in the same period last year, government spending has also been relatively low, keeping the primary balance stable.

"Government spending has not yet been fully realized, so the primary balance remains in a healthy position," Ronny explained.

He added that this stability has helped Indonesia maintain its sovereign credit ratings, with Fitch, S&P, and Moody’s keeping Indonesia’s rating at a stable level. Fitch continues to rate Indonesia at BBB with a stable outlook, S&P at BBB stable, and Moody’s at Baa2 stable.

"Although state revenue has contracted, limited government spending has kept the primary balance positive, ensuring Indonesia's debt repayment capacity remains strong, which is why agencies like Fitch have maintained our credit rating," he concluded.