Finance Commission XI of the House of Representatives (DPR) held a hearing on late Thursday, July 3, 2025, with key economic leaders to review macroeconomic assumptions underlying the 2026 State Budget (APBN).

The meeting − with Finance Minister Sri Mulyani Indrawati, National Development Planning Minister Rachmat Pambudy, Indonesian Central Bank (BI)Governor Perry Warjiyo, and Financial Services Authority (OJK) Chairman Mahendra Siregar in attendance − focused on laying the groundwork for the upcoming fiscal year, including projections on growth, inflation, fiscal deficit, and public revenue.

“The agenda for tonight is to present the economic assumptions for the 2026 State Budget, and then to form a working committee (Panja), as per usual procedures,” Commission XI Chairman Mukhamad Misbakhun said during the session.

Economic outlook for 2026

The proposed macroeconomic assumptions include GDP growth in the range of 5.2–5.8 percent, inflation between 1.5 and 3.5 percent, and a 10-year government bond yield (SBN) of 6.6–7.2 percent. The rupiah is expected to hover around Rp16,500–16,900 per US dollar, while Indonesia’s crude price (ICP) is projected between US$60–80 per barrel.

Other key assumptions include oil lifting of 600,000–605,000 barrels per day and gas lifting at 953,000–1.17 million barrels of oil equivalent per day. The government aims to reduce the poverty rate to 6.5–7.5 percent and bring down unemployment to between 4.5–5 percent. The Gini ratio, a measure of inequality, is expected to stay within 0.379–0.382.

The 2026 budget design features a fiscal deficit of 2.48–2.53 percent of GDP. State revenue is projected at 11.71–12.22 percent of GDP, while expenditure is set at 14.19–14.75 percent. The tax revenue target stands at 8.9–9.24 percent, customs and excise at 1.18–1.21 percent, and non-tax revenue (PNBP) at 1.63–1.76 percent of GDP. Grants are expected to make up a minimal 0.002–0.003 percent.

On the spending side, the central government is expected to disburse between 11.41 and 11.86 percent of GDP, with transfers to regional governments amounting to 2.78–2.89 percent. The primary balance deficit is expected at 0.18–0.22 percent, in line with financing needs.

Reducing debt

Earlier in the day, the House Budget Committee (Banggar) approved the Finance Ministry’s request to use Rp85.6 trillion (US$5.28 billion) of the 2024 Budget Surplus (SAL) to reduce debt issuance for the 2025 fiscal year. This is part of efforts to mitigate the widening budget deficit, projected to reach Rp 662 trillion or 2.78 percent of GDP − an increase from the original target of Rp 616.2 trillion.

"The use of Rp 85.6 trillion in SAL will help reduce government bond issuance and cover key spending and deficit financing needs," Banggar Vice Chairman Wihadi Wiyanto said.

Banggar Chairman Said Abdullah confirmed the decision with a unanimous nod from lawmakers.

Finance Minister Sri Mulyani previously disclosed that the 2025 budget is under pressure due to weaker-than-expected revenue performance. As of mid-year, state revenue is expected to total Rp 2,865.5 trillion, below the earlier projection of Rp 3,005.1 trillion.

This shortfall, she said, was driven by delays in implementing the 12 percent VAT, as well as missing dividend payments from state-owned enterprises (SOEs), including Rp80 trillion now managed under the State investment management agency, Danantara.

“In total, we are facing a revenue shortfall of around Rp150 trillion due to both VAT delays and missing SOEs dividends,” Sri Mulyani noted.