Indonesia's Debt Is Swelling If The Government Does Not Reform State Revenue

Photo: Special

JAKARTA - The economist of UPN Veteran Jakarta, Achmad Nur Hidayat, said that the fiscal policy direction conveyed by President Prabowo Subianto in delivering the 2026 Financial Note and RAPBN must be balanced with reform of state revenues.

This is because to finance large-scale social programs such as the expansion of Free Nutrition Food and other development agendas is not enough just to rely on cutting budget leaks.

Tax roads must be strengthened. Tax reform, data integration, tax digitization, to the introduction of a carbon tax and digital economy tax must be carried out. Without that, the sustainability of social programs will only increase the debt burden," he explained, Sunday, August 17, 2025.

He reminded the position of government debt that has touched IDR 10,269 trillion or equivalent to 40 percent of GDP, with a stagnant tax ratio in the range of 9 10 percent.

This condition has the potential to create fiscal pressure, where the debt interest expense attracts development spending space.

In addition, the government must also apply fiscal discipline to maintain the credibility of the financial market and investor confidence.

The target deficit of zero will be realistic if structural reforms are carried out from the start of the government.

"If the source of financing is not fixed, the APBN will be hampered by short-term debt financing in high interest. This could disrupt economic stability," said Achmad.

According to him, the ambitious target of the 2026 State Budget also has the potential to trigger pressure on the banking sector. The reason is, if short-term debt financing is too aggressive, banks will be trapped in a high-interesting debt securities portfolio that can trigger crowding out of credit into the real sector, so that economic growth will slow down.

He emphasized that the zero deficit plan could still be achieved if the government was able to combine spending efficiency, strengthening tax bases, and careful debt management.

The key is at the execution rate. The APBN number on paper will be meaningless if there is no courage to dismantle unproductive shopping posts," said Achmad.

Previously, President Prabowo Subianto explained the Financial Note and RAPBN 2026 with a deficit target of 2.48 percent of gross domestic product (GDP). The government is also targeting a zero deficit in 2027 or 2028.

In his speech, the President emphasized his commitment to eradicating corruption and budget leaks, including saving Rp300 trillion in the state budget which was considered prone to being misappropriated.

He called this step important in order to maintain the constitutional mandate and protect the country's wealth from unproductive outflows.

APBN 2026 juga memuat alokasi Rp335 triliun untuk memperluas program Makan Bergizi Gratis (MBG), yang ditargetkan menjangkau 82,9 juta anak sekolah, pelajar, serta ibu hamil dan menyusui.

Program ini menjadi salah satu prioritas sosial yang akan mulai digulirkan tahun depan.

The 2026 State Budget also contains an allocation of IDR 335 trillion to expand the Free Nutrition Food (MBG) program, which is targeted to reach 82.9 million school children, students, and pregnant and lactating women.

This program is one of the social priorities that will start rolling out next year.