Indonesia’s fiscal landscape for 2025 presents a dynamic picture of both challenges and concerted efforts. The Ministry of Finance (MoF), in its recent presentation, unveiled the State Budget (APBN) realization for the first ten months of the year (10M25), revealing a notable dip in state revenue countered by an assertive acceleration in government expenditure, ultimately widening the nation’s budget deficit.

Revenue Under Pressure: The Tax Collection Quandary

The nation’s coffers faced significant fiscal headwinds, with state revenue during 10M25 contracting by -6% year-on-year (YoY) to reach IDR 2,113 trillion. This figure represents only approximately 74% of the ambitious 2025 outlook, a stark contrast to the roughly 80% achieved in the same period of 2024. The primary culprit behind this downturn was a weakening in tax revenue, which constitutes the lion’s share of state income, recording a -3.9% YoY decline over the same period.

The Ministry of Finance elucidated that this net decrease in tax receipts stemmed from an elevated level of tax restitutions, particularly in Value Added Tax (VAT) and Luxury Goods Sales Tax (PPnBM). Interestingly, despite the net erosion, gross tax revenue still managed a modest +1.8% YoY growth during 10M25, indicating that underlying economic activity generating tax was present, but overshadowed by significant refunds.

Expenditure Surge: Fueling Economic Programs and Public Services

In a counter-cyclical move, state expenditure for 10M25 expanded by +1.4% YoY to IDR 2,593 trillion, marking a notable rebound from the -0.8% YoY contraction seen in 9M25. This acceleration brings the realization to approximately 74% of the 2025 APBN outlook, slightly trailing the 76% achieved in 10M24. The surge was primarily propelled by a robust increase in central government spending, which reached IDR 1,880 trillion, marking a +2.5% YoY rise.

Conversely, transfers to regional governments experienced a slight downturn, falling to IDR 713 billion, a -1.2% YoY decrease. A critical driver for the October expenditure surge was a significant +46.4% month-on-month (MoM) leap in goods expenditure. This accelerated spending was strategically allocated towards vital public services, the ambitious Free Nutritious Meals Program, and essential infrastructure maintenance, signaling a proactive stance by the government to stimulate the economy and support its citizens.

Spotlight on Social Welfare: The Free Nutritious Meals Program

The Free Nutritious Meals Program, a flagship social initiative, demonstrated significant reach. The Ministry of Finance reported that as of November 18, 2025, the program had already benefited 42.7 million recipients. This figure represents a robust 61% achievement against the revised 2025 target of 70 million beneficiaries. Financially, the program’s budget realization for 10M25 stood at approximately IDR 41 trillion, accounting for around 58% of its 2025 budget ceiling of IDR 71 trillion, as outlined in the MoF’s presentation.

Fiscal Discipline and Reallocation

Finance Minister Purbaya Yudhi Sadewa underscored the government’s commitment to stringent fiscal oversight. He stated that the ministry would continue to monitor the budget realization of all government programs, ready to reallocate funds from slow-moving initiatives. This proactive approach was evident on November 14, 2025, when Minister Purbaya revealed that several ministries had already returned a significant IDR 3.5 trillion in unabsorbed funds to the Ministry of Finance, demonstrating effective resource management.

Widening Fiscal Gap: The Budget Deficit

The interplay between declining revenues and increasing expenditures naturally led to a widening of the fiscal gap. The APBN 2025 realization for 10M25 recorded a deficit of IDR 480 trillion. This figure translates to approximately 2% of the nation’s Gross Domestic Product (GDP), a notable expansion when compared to the roughly 1.4% of GDP deficit reported during the same period in 2024. This signals the government’s strategic decision to leverage fiscal tools to support the economy amidst revenue challenges, but also highlights the need for continued vigilance in managing the national balance sheet.