2025.09.2305:34:19UTC+00Indonesia’s Parliament Greenlights 2026 Budget, Deficit Set at 2.68%

On Tuesday, Indonesia's parliament sanctioned President Prabowo Subianto's budget proposal for 2026, establishing a fiscal deficit set at 2.68% of the GDP. The parliamentary vote, led by the speaker, underscores an optimistic economic growth forecast of 5.4%, a slight increase from the 5.2% anticipated in 2025. The approved budget outlines planned revenues of IDR 3,153.6 trillion against projected expenditures totaling IDR 3,842.7 trillion. This represents a 9% increase in spending and a roughly 10% boost in revenue targets compared to the figures anticipated for 2025. The 2026 deficit projection is slightly under this year's estimate of 2.78% of GDP and remains compliant with the legal cap of 3%. Key inclusions in the budget are an expansion of President Prabowo’s signature initiative ensuring free meals for students and pregnant women, alongside a substantial increase in defense allocations. Initially presented to parliament in August, the free meals initiative was estimated to require an allocation of IDR 335 trillion for 2026. Additionally, defense spending is projected to surge by 37%, reaching IDR 335.3 trillion.