Opening Conference and APBN Introduction The press briefing opened with warm greetings amid the Ramadan season, stressing the significance of the event and acknowledging the long wait by media representatives. The meeting was held at the Ministry of Finance to discuss the national budget for 2025. A sense of unity and anticipation was evident as officials set the stage for a detailed fiscal review.
APBN as a Financial Tool for New Administration The national budget is positioned as a crucial instrument under President Prabowo and Vice President Gibra, designed to support strategic government programs. It aims to balance flexibility with prudent, long-term planning to achieve national priorities. This approach underscores a commitment to agility while safeguarding fiscal sustainability.
Core Macroeconomic Assumptions for APBN 2025 Key assumptions for the budget include a 5.2% growth target, 2.5% inflation, and an exchange rate of Rp16,000 per US dollar. A 7% yield on 10-year government bonds was also set, alongside projections for oil prices and production volumes. These baseline figures help shape the fiscal framework and guide policy formulation.
Realized Economic Outcomes of 2024 and Projection Challenges Indonesia’s strong performance in 2024, marked by 5.03% growth and lower-than-expected inflation at 1.57%, highlighted effective economic management. The stability in currency and yield trends bolstered confidence, despite global uncertainties. Early 2025 developments, however, necessitated a careful reassessment of projections to ensure data-driven revisions.
Impact of Global Economic Volatility on National Finances Global disruptions and policy shifts in major economies injected significant uncertainty into fiscal projections. Unanticipated executive orders and unilateral actions contributed to volatility in critical financial indicators. This external instability forced policymakers to remain vigilant and adaptive in their fiscal planning.
Currency Stability, Inflation, and Yield Trends Amid Disruptions The rupiah faced gradual depreciation, influenced by global market turbulence and policy shifts abroad. Despite this, government bonds maintained yields close to the targeted 7%, reflecting resilient fiscal management. Proactive measures to control administered prices resulted in managed inflation levels, even bordering on deflation at times.
Revision of Oil Prices and Energy Production Assumptions Market realities led to a critical reassessment of oil price forecasts, diverging from the originally assumed $82 per barrel. Adjustments were also required as actual lifting volumes for oil and gas trailed behind expectations. These revisions were essential for recalibrating both revenue estimates and expenditure planning in the budget.
Revenue Targets and Early APBN 2025 Fiscal Realization The budget set a revenue target of 3.5 trillion, driven by both tax receipts and non-tax income components. Early fiscal realization figures revealed robust progress toward these targets, with significant collections already on track. Caution was exercised in reporting to avoid misinterpretations amid evolving data.
Government Expenditure Structure: Central Spending and Transfers Expenditures were divided between central government spending and transfers to regional authorities, with a total allocation exceeding 600 trillion. The central component covers essential ministry operations while maintaining vital social assistance schemes. This dual structure ensures that both core services and regional needs are addressed effectively.
Financing Progress and Deficit Management in APBN The financing strategy was designed to support a controlled deficit, targeting around 616.2 trillion while maintaining a primary balance. Early reports showed that 35.7% of the planned financing had been mobilized within the first two months. This achievement underscored a disciplined approach to managing the budget gap relative to GDP.
Shifting Global Trade Dynamics and Unilateral Policies The global economic order has shifted from multilateral cooperation to a focus on unilateral decision-making by dominant powers. Such a transition has disrupted traditional trade relationships and altered longstanding international rules. This change highlights a move away from globally agreed frameworks toward policies driven by individual national interests.
Escalation of Trade Tariffs and Counteractions in Global Markets Major economies, led by unilateral tariff impositions, escalated trade tensions through successive rounds of countermeasures. Tariffs on energy, automotive, and industrial goods surged in an unprecedented series of actions. These escalations contributed to heightened uncertainty and disrupted conventional market stability.
Effects of Trade Wars on Supply Chains and Investment Flows The intensifying trade disputes unsettled global supply chains, forcing manufacturers to reevaluate their sourcing and production strategies. Elevated tariff pressures led to sharp shifts in investment flow and realignment of supply networks across borders. This disruption forced both private and public sectors to adapt quickly in an unpredictable market.
Commodity Price Corrections: Coal, Oil, and CPO Trends After a period of high price surges, crucial commodities like coal and oil experienced pronounced corrections. Coal prices, which had once soared, dropped sharply, while oil prices adjusted downward to more sustainable levels. Meanwhile, recovery trends in commodities such as CPO provided a positive outlook for revenue stabilization.
Rebound in Manufacturing and Expansion in Production Activity Indonesia’s manufacturing sector demonstrated remarkable resilience by rebounding from global disruptions. Production activity accelerated as reflected in improved PMI figures, outpacing several other major economies facing contraction. This rebound underscored the sector’s capacity to adapt and grow even under challenging conditions.
Resilience in Domestic Consumption, Investment, and Export Domestic consumption sustained growth near 5%, buoyed by sound fiscal and monetary measures. Investment activities, though modest, trended upward, and export performance remained robust despite external headwinds. This overall resilience provided a steady foundation for the broader economy during turbulent times.
Strengthening Trade Surplus and Capital Inflows Amid Turbulence A significant widening of the trade surplus was noted as export gains and controlled imports reinforced positive balance figures. Increased export performance led to a healthier trade account and inspired confidence in the nation’s external position. Substantial capital inflows further underscored the appeal of Indonesian sovereign bonds as a safe investment.
Exchange Rate Dynamics and Managed Inflation Outcomes Despite modest depreciation of the rupiah, stringent policy measures helped in maintaining overall economic stability. Administratively managed prices contributed to lower inflation figures and occasional periods of deflation. These monetary interventions played a critical role in balancing external pressures and domestic price stability.
Efficiency Measures to Streamline APBN Spending A rigorous program of efficiency measures was implemented to trim non-essential government expenditures. Efforts focused on cutting back on ceremonial spending, unnecessary travel, and duplicative consultancy fees. These reforms aimed to ensure that the budget funds were directed toward high-priority national programs.
Implementation of Budget Efficiencies in Government Agencies Budget efficiency initiatives were systematically rolled out across various government agencies to reduce wasteful spending. A detailed review targeted non-salary and discretionary costs while protecting essential services such as employee compensation. The initiative underscored a commitment to fiscal discipline without compromising core public functions.
Optimization of Social Assistance and Subsidy Programs Social protection measures, including direct cash transfers and food subsidies, continued unabated even as efficiency drives were pursued elsewhere. Programs like PKH, card subsidies, and other welfare initiatives maintained their funding to support the vulnerable. The strategy ensured that fiscal tightening did not undermine critical social safety nets.
Energy Subsidies: Electricity Discounts and Price Controls Significant reforms in energy subsidies introduced a 50% discount on electricity for eligible customers. Price controls were carefully calibrated so that the government would cover the gap between market rates and subsidized costs. Such policies provided relief for consumers and helped stabilize living costs amid volatile energy markets.
Increased Investment in Education and Digital Learning Transformation Robust funding in the education sector prioritized renovations, new school construction, and digital learning enhancements. Investments were targeted to improve infrastructure and facilitate modern educational delivery for millions of students. These efforts reflected a long-term commitment to upgrading human capital and fostering innovation in learning.
Strengthening the Health Sector: Expenditure and Service Expansion Increased allocations for health services facilitated the construction and revitalization of hospitals across various regions. The expanded funding supported comprehensive healthcare initiatives, including both preventive and curative services. Strengthening health infrastructure was viewed as critical to ensuring quality public health amid economic challenges.
Enhancing Pension, Social Protection, and Subsidized Utilities Efforts to streamline pension disbursements ensured that retirees received timely and full benefits. Enhanced measures for subsidized utilities—covering electricity, fuel, and fertilizers—helped maintain affordability for citizens. This integrated approach reinforced the broader social protection framework during uncertain times.
Strategic Outlook for National Investments and Future Economic Stability Long-term strategies focused on critical infrastructure investments and national development projects to secure future growth. Progressive policies are being implemented to build resilience against global disruptions while fostering sustainable, inclusive development. Strategic planning and continuous reforms offer a hopeful trajectory towards a more advanced and resilient national economy.
Transformative Health Initiatives Hospitals are being upgraded and TB eradication efforts intensified with 300,000 screenings conducted nationwide. Strategic detection and complete treatment protocols ensure tuberculosis cases are fully resolved. National health insurance covers 96.8 million beneficiaries, securing comprehensive access to healthcare services throughout the country.
Robust Food and Agriculture Reforms A significant budget increase of 155.5 trillion has been directed toward food security and agricultural productivity. Investments target enhancing supply chains and stabilizing rice prices through coordinated efforts with Bulok. These reforms aim to boost farmer incomes and move towards self-sufficiency in essential food supplies.
Nationwide Free Health Screening Expansion A dedicated allocation of 3.4 trillion finances extensive free health examinations across the nation. Over 415,000 citizens have been served in nearly 8,885 primary health centers spanning 498 regions. The program covers all age groups, ensuring early diagnosis and preventive care for a healthier population.
Scaling the Nutritious Meals Program The government has expanded the free nutritious meals initiative from an initial target of 17.9 million to over 82.9 million recipients. Increased funding and efficient disbursement have already aided more than 2 million individuals. This program strengthens nutrition in schools and communities, supporting the wellbeing of children and mothers alike.
Enhanced Social Protection Strategies Multiple direct benefit programs, including PKH and UMKM soft loans, are reinforcing social safety nets. Subsidies are provided for essential services like energy and education, ensuring vulnerable groups receive necessary support. These initiatives protect citizens from economic volatility while fostering community resilience.
Comprehensive Holiday Allowance Policy A broad holiday allowance scheme has been introduced for civil servants, military personnel, and police at both central and regional levels. Billions have been allocated through APBN and APBD to ensure timely and complete disbursement. This policy supports festive spending and helps manage the financial demands of the holiday season.
Reducing Travel Costs During Festive Seasons Government measures have lowered travel expenses during the festive period by reducing flight ticket prices and discounting toll fees. The initiative involves government coverage of certain taxes and significant discounts on transportation. These actions ease the burden on travelers and promote a more accessible holiday season.
Strategic Transfers to Regional Governments Transfers to local governments have reached 136.6 trillion by February 2025, bolstering various public service sectors. Local funds support salaries for public employees, educational initiatives, and healthcare operations. This strategic reallocation enhances regional autonomy and service efficiency across provinces.
Revolutionizing Teacher Allowance Delivery A reformed disbursement scheme now channels teacher allowances directly from central funds via APBN. Over one million educators will benefit from a system that emphasizes accuracy and prompt payment. This measure streamlines administrative processes and reinforces teacher professionalism nationwide.
Achieving Efficiency in Fiscal Transfers Efforts to streamline fiscal transfers have resulted in reallocated savings from both central and local budgets. Resources saved through efficiency measures are redirected to productive and high-impact programs. This approach safeguards essential services while promoting fiscal sustainability.
Strengthening Local Government Fiscal Management Local authorities display improved financial management with reduced regional bank fund balances. Enhanced treasury practices and stricter disbursement conditions contribute to more efficient fund utilization. The result is greater accountability and better delivery of public services at the local level.
Seasonal Tax Revenue Patterns and Trends Tax collections exhibit predictable seasonal patterns, peaking in December and dipping in January and February. Commodity price declines, particularly in coal, oil, and nickel, contribute to lower early-year revenues. Regular fluctuations underscore the influence of market trends on fiscal performance.
Impact of Payroll Tax Adjustments Adjustments in PPH 21, including normalization of overpayments, have temporarily affected revenue figures. When recalibrated, the effective tax rates reveal higher underlying payroll tax revenues. This policy shift enhances long-term revenue projections despite initial declines.
Enhanced Domestic VAT Collection Measures A 10-day extension for domestic VAT payments has been introduced to ease processing pressures. Normalized figures indicate that VAT revenues have grown by 8.3% compared to the previous period. The policy supports smoother collections and strengthens overall tax performance.
Import VAT and Sectoral Tax Growth Increases in import VAT mirror the rise in overall import volumes and sector productivity. Key sectors such as manufacturing, mining, and finance consistently contribute to total tax revenue. These robust sectoral performances provide a buffer against commodity price fluctuations.
Excise and Customs Revenue Developments Excise tax collections have been maintained with only modest adjustments, ensuring steady revenue flow. Customs duties also reflect balanced tariff and volume dynamics, supporting state financial needs. These income streams contribute significantly to national funding and regulatory efforts.
Optimizing Tax Collection with Strategic Initiatives Cross-agency collaboration and advanced digital tracking are being deployed to close existing tax gaps. Focused efforts target high-potential sectors like coal, nickel, and palm oil to increase compliance. Strategic enforcement and innovative measures are expected to boost overall state revenue.
Navigating a Changing Global Fiscal Landscape The global economic environment is shifting from multilateral cooperation to more unilateral approaches. Debates at recent G20 meetings highlight diverging perspectives on climate finance and global taxation. These geopolitical changes are reshaping international fiscal policies and influence domestic strategies.
Sustaining Indonesia's Credit Rating Indonesia’s credit rating remains steady at level B, reflective of sound economic management. Controlled debt ratios and robust economic fundamentals underpin this stable outlook. Continued foreign investor confidence plays a crucial role in sustaining fiscal resilience.
Robust Sovereign Bond Market Performance Yields on sovereign bonds have shown a modest downward trend, with spreads remaining low relative to global benchmarks. High subscription rates, particularly among millennial investors, signal robust market confidence. The healthy performance of these bonds underscores effective fiscal management and investor trust.
Prudent APBN Financing and Execution Government financing has already reached 35.7% of annual targets through careful and disciplined execution. Fund management emphasizes cost efficiency and strategic risk control. This prudent approach instills confidence and ensures that fiscal policies align with long-term economic stability.
Strategic Investments in Food Security A focused allocation of 16.6 trillion has been directed toward stabilizing rice prices and safeguarding food supplies. The funds support procurement and price stabilization measures via Bulok, benefiting both farmers and consumers. This strategy aims to secure a consistent food supply and control inflation within targeted limits.
Expanding Affordable Housing Solutions Financing through the FLPP program is boosting access to affordable homes for low-income communities. Collaborations with both state and private financial institutions have already delivered thousands of housing units. Enhanced bank refinancing options offer attractive low-interest rates, making homeownership more accessible.
Establishing a Dedicated State Investment Entity The creation of Dana Antara marks a strategic move to manage dividends and reinvestments from state-owned enterprises. Empowered by state law, the entity optimizes public assets without compromising governmental equity. Its mandate includes leveraging profits to fuel strategic growth across key sectors.
Fostering Fiscal Consolidation and Efficiency Efforts to consolidate the budget have led to significant reallocations and cost-saving initiatives across both central and local expenditures. These measures eliminate wastage while preserving critical public services. Enhanced efficiency in spending creates fiscal space for high-impact, transformative programs.
Ensuring Future Economic Resilience The government remains committed to maintaining fiscal discipline amid global economic uncertainties. Strategic policies are in place to balance growth initiatives with controlled deficits and stabilized public spending. Ongoing adaptability and transparent monitoring pave the way for a resilient and robust economic future.