Indonesia allocates Rp3,613.1 trillion (US$229.6 billion) for government expenditure in the 2025 State Budget (APBN), including for the central government spending at Rp2,693.2 trillion (US$171 billion) and regions across the country at Rp 919.9 trillion (US$58 billions).
“Spending will be prudently managed in order to be genuinely efficient and productive, so that in addition to supporting government priority programs, it can also create strong multiplier effects on the economy,” President Joko “Jokowi” Widodo said while addressing the State Budget for 2025 Fiscal Year and its Financial Note Address at the Parliament on Friday, August 16, 2024.
Jokowi cited that the education budget at Rp722.6 trillion (US$ 46 billion) is allocated to improve school children’s nutrition, renovate schools, and develop leading schools. The education budget is also allocated to expand scholarship programs, promote culture, strengthen world-class universities, and develop research.
Social protection budget at Rp504.7 trillion (US$32 billions) is allocated to reduce the burden on the underprivileged and vulnerable families, and accelerating poverty alleviation, through more appropriate, effective, and efficient manners.
The health budget is planned at Rp197.8 trillion (US$12 billion), or 5.5 percent of the state spending. The budget is aimed at improving the quality and affordability of health services, accelerating the reduction of stunting rate and infectious diseases such as tuberculosis as well as providing free health checks.
The food security is allocated at Rp124.4 trillion (US$ 8 billions), which is directed at supporting productivity increase, maintaining food availability and affordability of food prices, improving the distribution chain for agricultural products, and increasing farmers’ access to financing.
The budget for infrastructure development is allocated at Rp400.3 trillion (US$24 billion). The budget is mainly used for education and health infrastructure, connectivity infrastructure, food and energy infrastructure as well as sustainable development of the Nusantara Capital.
The budget for the regions is allocated at Rp919.9 trillion (US$ 58.4 billion), which will be used to increase the synergy of central and regional fiscal policies, harmonize central and regional spending, as well as reduce subnational disparities and strengthen subnational cooperation. Efforts to increase the Regionally Generated Income must take into account the investment climate, ease of doing business and people’s welfare, and must improve access to and quality of public services.
Budget assumption
Jokowi said the design of the 2025 State Budget (APBN) is based on the following basic assumptions: Inflation will be maintained at around 2.5 percent and the economy is estimated to grow by 5.2 percent. As the global economic condition is relatively stagnant, the economic growth will rely more on domestic demands. The people’s purchasing power will be tightly maintained through controlled inflation, job creation, and support for social assistance and subsidy programs.
The government will continue to strive for increasing export-oriented and high value-added products, supported by competitive fiscal incentives while maintaining fiscal sustainability. The mix of fiscal, monetary, and financial sectors will be maintained to accelerate economic growth and ensure financial system stability.
“Rupiah exchange rate is projected to hover around Rp16,100 per US dollar while the yield on 10 year-government bonds is estimated at 7.1 percent. The government will consistently be responsive to global monetary dynamics. The Indonesian Crude Price (ICP) is estimated at US$82 per barrel. Lifting of oil and natural gas is estimated to reach 600 thousand barrels per day and 1.005 million barrels of oil equivalent per day respectively,” he pointed out.
