The 2025 State Budget Deficit Is Widening, Prabowo's Government Will Withdraw IDR 775.9 Trillion Debt

Illustration of state debt (Doc. ANTARA)

The government is designing a new debt withdrawal of IDR 775.9 trillion to finance the 2025 State Revenue and Expenditure Budget (APBN) which will be fulfilled through the withdrawal of loans and issuance of Government Securities (SBN). The government's loans consist of domestic loans and foreign loans.

This is stated in the Financial Note Book II of the 2025 RAPBN which was released after President Joko Widodo (Jokowi) conducted a State Speech for the 2025 RAPBN and Financial Notes in the DPR, yesterday, Friday, August 16.

In addition, the 2025 RAPBN is designed to have a deficit of 2.53 percent equivalent to Rp616.2 trillion or wider than the 2024 target of 2.29 percent equivalent to Rp522.8 trillion.

In the document, the government plans to withdraw debt for 2025 amounting to IDR 775.9 trillion, an increase of IDR 222.8 trillion from the outlook for debt financing in 2024 which is valued at IDR 553.1 trillion.

The management of debt financing aims to meet the financing needs of the state budget by taking into account the balance between minimum costs and tolerable level of risk.

In addition to fulfilling APBN financing, debt management is also directed as a means to support domestic financial market development.

The government views debt as not only an instrument to cover the needs of the state budget but also as a policy enabler to create a deep, active, liquid, inclusive, and efficient domestic financial market.

In debt management, the government emphasizes that it will continue to prioritize the principle of prudence, keep it in order to always support the creation of fiscal alignment, and pay attention to fiscal risk vulnerability.

"The 60 percent debt ratio to GDP and the 3 percent budget deficit to GDP is a reflection of fiscal discipline so that the Government's debt is safe and under control," he wrote in the document.

In the RAPBN for the 2025 fiscal year, debt financing of IDR 775.9 trillion will be fulfilled through the withdrawal of loans of IDR 133.3 trillion and the issuance of SBN worth IDR 642.6 trillion. Meanwhile, the Government's loans consist of domestic loans of IDR 5.2 trillion and foreign loans reached IDR 128.1 trillion.

Meanwhile, loan instruments will be used more to encourage government priority activities or projects.

Meanwhile, debt financing originating from SBN will be fulfilled through the issuance of Government Securities (SUN) and State Sharia Securities (SBSN)/South Sumatra.