JAKARTA - Permata Bank Chief Economist Josua Pardede stated that the acceleration of government spending carried out during the first quarter of this year also had an impact on the increase in the amount of money in circulation in March 2026.
"This shows that faster fiscal activity adds liquidity to the economy, thereby strengthening transactions, consumption, and business activities," said Josua Pardede when contacted by Antara from Jakarta, Saturday.
Bank Indonesia (BI) recorded the economy's liquidity or broad money (M2) in March 2026 grew 9.7 percent year-on-year (yoy), higher than February 2026 which was recorded at 8.7 percent yoy.
One of the main drivers is the net bill to the central government which grew 39.2 percent year-on-year, up from the growth in February 2026 which was 25.6 percent year-on-year.
However, Josua assessed that the effect needs to be interpreted carefully because increased liquidity does not necessarily reflect quality economic growth, if it is not followed by an increase in production, private investment, and strengthening productivity.
He gave an example, the government's spending tends to be consumer-oriented, such as the provision of Eid Al-Fitr (THR) during the Ramadan and Eid Al-Fitr periods, only providing a momentary boost to national economic growth and no longer having an effect in the following months.
"If more spending is more consumer or seasonal, the impact can quickly fade after the holiday period is over," said Joshua.
The increase in government spending activities in the first quarter is closely related to the increase in government consumption expenditures in that period, as reflected in the calculation of the first quarter economic growth in 2026.
The Financial System Stability Committee (KSSK) noted that the realization of state expenditures in the first quarter of 2026 reached IDR 815.0 trillion or grew 31.4 percent year-on-year, consisting of central expenditures of IDR 610.3 trillion and transfers to regions of IDR 204.8 trillion.
Meanwhile, the Central Statistics Agency (BPS) reported an increase in government consumption expenditure in the Gross Domestic Product (GDP) by 21.81 percent year-on-year in the period.
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