Indonesia’s public debt is expected to rise significantly to 40.1 percent of gross domestic product (GDP) in 2025, up from an estimated 29.2 percent in 2024, the World Bank said in its April 2025 report. 

The projection, outlined in the World Bank’s Macro Poverty Outlook (MPO) for Indonesia released in April 2025, attributes the increase to higher government spending under the new administration of President Prabowo Subianto. The added expenditures are intended to support key priority programs, including large-scale social initiatives.

“Spending is projected to accommodate new priority programs, which will push the fiscal deficit to 2.7 percent of GDP,” the report stated as quoted on Friday, April 25, 2025.

The government’s projected budget deficit for 2025 surpasses its original target of 2.53 percent of GDP, reflecting rising costs associated with expanding flagship programs such as the Free Nutritious Meals (MBG) initiative.

The World Bank further warned that the increase in debt would predominantly come from loans, potentially raising the government’s interest payments to 19 percent of total state revenue.

To finance its broader spending agenda, the Ministry of Finance plans to secure new debt worth Rp775.86 trillion (US$48.49 billion) in 2025. This includes a net increase in foreign loans totaling Rp128.13 trillion (US$7.8 billion), which comes from gross external borrowing of Rp216.49 trillion (US$13.29 billion). Of that amount, Rp88.36 trillion (US$5.42 billion) will be used to service existing foreign debt.

The remaining Rp128.13 trillion (US$7.8 billion) will be allocated for domestic spending, including Rp80 trillion (US$4.9 billion) in cash loans and activity-based loans amounting to Rp125.52 trillion (US$7.7 billion) for central government ministries and agencies.

An additional Rp1.59 trillion (US$97.5 million) is slated for grant-related projects, while Rp9.3 trillion (US$570 million) is designated for programs involving state-owned enterprises and regional administrations.

Despite the debt increase, the government has reiterated its commitment to maintaining fiscal discipline while ensuring the delivery of essential programs aimed at boosting economic growth and public welfare.