Indonesia’s 2024 Budget Deficit Lower Than Expected at 2.3% of GDP

Indonesia’s unaudited budget deficit for 2024 stood at 507.8 trillion rupiah ($31.38 billion), or 2.29% of GDP, surpassing initial expectations but exceeding the 2023 figure of 1.61%. The finance ministry had earlier projected a 2.7% deficit, but higher tax revenues in the final quarter helped narrow the gap. Finance Minister Sri Mulyani Indrawati highlighted the deficit as a solid foundation for a government transition, coinciding with Prabowo Subianto’s inauguration as president in October.

The improved fiscal outcome stemmed from unexpected tax revenue growth and a surplus of 45.4 trillion rupiah from higher debt issuance in 2023. This excess cash might reduce debt issuance plans for 2025. Despite a forecasted increase in the deficit to 2.53% of GDP in 2025, Sri Mulyani emphasized the need for fiscal prudence amid global uncertainties, including potential economic shifts in the U.S. under President-elect Donald Trump.

Prabowo’s administration has introduced ambitious programs such as the “Free Nutritious Meals” initiative, with a 71 trillion rupiah budget to expand farmland and support free school lunches. In 2024, government revenues rose by 2.1% to 2,842.5 trillion rupiah, while spending increased by 7.3% to 3,350.3 trillion rupiah. Financial markets are closely watching the new government’s fiscal policies as it balances ambitious projects with economic stability.